Sungho Electronics Acquires AI Chip Equipment Maker ADS Tech for 280 Billion Won

Sungho Electronics (054960.KQ), a KOSDAQ-listed power supply manufacturer, has acquired ADS Tech, a maker of optical module equipment used in AI data centers, for approximately 280 billion won ($207 million).

Optical modules, devices that convert electrical and optical signals for data transmission, have seen surging global demand amid the expansion of the artificial intelligence data center market. ADS Tech generates more than 90% of its revenue from Nvidia.

According to investment banking sources on Wednesday, Sungho Electronics' board approved the acquisition of 100% of ADS Tech for approximately 280 billion won. Of the total, 150 billion won will come from acquisition financing arranged by Korea Development Bank and others, while Sungho Electronics will contribute 70 billion won. Existing ADS Tech management including CEO Song Kwang-yeol will reinvest approximately 60 billion won through convertible bonds and bonds with warrants. The current management team will continue to run ADS Tech.

Founded in 2000, ADS Tech manufactures optical module alignment equipment. The company aligns lenses, chips, and optical fibers inside optical transceivers—core modules for AI data center optical communication equipment—at nanometer precision to enhance light transmission efficiency.

Only two companies globally produced this equipment: ADS Tech and Ficontec. After Ficontec was acquired by a Chinese company last year, demand for ADS Tech equipment has been growing rapidly, particularly from the United States. More than 90% of ADS Tech's revenue last year came from Mellanox, an Nvidia subsidiary. Mellanox is a network equipment company that Nvidia acquired for approximately 10 trillion won in 2020.

As the AI data market expands rapidly, ADS Tech has posted strong results. The company recorded revenue of 63.5 billion won and operating profit of 25.2 billion won last year. For the first three quarters of this year, cumulative revenue reached 45.6 billion won with operating profit of 20.9 billion won.

The acquisition allows Sungho Electronics to transform from a power supply manufacturer into an AI infrastructure equipment maker.

Sungho Electronics has been pursuing new business expansion through mergers and acquisitions under CEO Park Sung-jae, the eldest son of founder and Chairman Park Hyun-nam. In October this year, the company acquired DES, a semiconductor back-end process chiller specialist. Sungho Electronics posted consolidated revenue of 171.4 billion won and operating profit of 3.4 billion won for the first three quarters of this year.