[조아라의 소프트차이나 87]
“Realization of semiconductor demonstration and localization through the acquisition of a Korean company”
The Chinese method used in the past … The spine is ‘cold’
Buying manpower, acquiring business… China is absorbing Korea’s ‘national core technology’
22 trillion won in damages over 5 years… “Strong protective measures are needed”
Kowind ST, a company specializing in the design and manufacture of domestic semiconductor and liquid crystal (LCD) equipment, was recently sold to a Chinese company. Established in 2005, Kowind ST is a small domestic company that holds many original patents for LCD repair equipment as well as technology for manufacturing organic light emitting diode (OLED) repair equipment. In 2019, the Moon Jae-in government was recognized for its technological prowess and growth potential to the extent that it was selected as a small and medium-sized company (materials, parts and equipment) to lead Korea’s digital economy, but it is selling to China in just three years.
“Realization of semiconductor demonstration and localization through the acquisition of a Korean company”
On the 10th, China’s Focuslight Technologies (Geoguang Kerzi) announced on the Shanghai Exchange that it would acquire 100% of the shares of Kowind ST in Korea for 350 million yuan (about 69.9 billion won). Focusrite, founded in 2007, is a company that manufactures and sells high power semiconductor laser components and optical components. Following the acquisition of LIMO, a German semiconductor laser company in 2017, the company is slowly engulfing leading foreign companies, including the recent embrace of Korea’s Kowind ST.
Kowind ST has about 60 patents related to LCD and OLED laser repair. This technology is used to correct defects in the production of display panels. Laser repair equipment with this technology is essential for companies that mass produce displays. Through this acquisition of China’s Focuslite, we intend to localize core display equipment and semiconductors in the medium to long term.
Focusrite said, “Clear synergy is expected across all semiconductor process businesses, including advanced displays and semiconductor integrated circuits.”
The Chinese method used in the past … My spine is ‘cold’
When you watch the acquisition of Cowind ST, you can feel deja vu. This is the case of BOE (Jingdong Fang), which is currently the largest display company in China and has the largest share of the global market. Until the early 2000s, BOE was only a subcontractor to Japanese companies. The reason BOE, which suffered from continuous losses, ‘revived’ was at the end of 2002 when it acquired ‘Hydis’, a liquid crystal display (LCD) subsidiary of Hyundai Electronics in Korea. BOE merged computing immediately after the acquisition to extract core technology, then went bankrupt four years later.
BOE, which was at the third class level at the time, started LCD production in June 2003 with Hydis technology behind it. And finally, in 2017, it surpassed LG Display to become the world’s largest LCD panel market share leader. It recently started producing next-generation OLED panels and supplying them to Apple’s iPhone 14. This is the first time that Chinese small and medium OLED panels have been installed in a new iPhone. Meanwhile, Samsung Display and LG Display have supplied OLED displays for iPhones.
According to market researcher Omdia, Chinese display companies BOE, CSOT (China Star), Tianma, and Visionox accounted for 20.5% of the small and medium-sized organic light-emitting diode (OLED) market in the second quarter of last year. Market share, which was only in single digits in 2019, has risen to 17.7% annually last year.
Buying manpower and acquiring companies…China is sucking up Korea’s ‘national core technology’
Chinese companies stealing technology and manpower are no longer a thing of the past. According to a recent job site, there was an announcement that we are looking for a person with experience in small OLED development and processing who can work in China. Recruitment conditions include those with more than 5 years of experience in the general small display process or those with more than 8 years of experience in the semiconductor CF process. Industry speculation is that the company is a Chinese BOE. Industry insiders say the salary is three times higher than in Korea, so there is no choice but to do it.
Last year, MagnaChip, a medium-sized system semiconductor company, was also at risk of being transferred to a Chinese private equity fund for about $1.4 billion (about 1.78 trillion won). MagnaChip was founded in 2004 as a spin-off from the defunct division of Hynix Semiconductor (now SK Hynix). However, shortly before the sale, the acquisition fell through because the United States blocked the transaction for reasons of national security risk. This prevented the global OLED chip core technology leak.
Recently, the number of national key technology leaks has been steadily increasing. According to the National Intelligence Service, between 2018 and July this year, a total of 83 cases of high-tech leaks were detected by the National Intelligence Service. Among them, 33 cases (39.8%) were found to be ‘national core technologies’ which had a significant impact on national security and the national economy. In particular, the damage was found to focus on Korea’s main businesses (69 cases), such as semiconductors, electricity and electronics, exhibitions, and automobiles. They are said to steal technology through methods such as △purchase of key personnel △use of mergers and acquisitions △use of partner companies △gathering of technical information through research companies on behalf of △leaks of technology under the guise of joint research △requirement to submit data on conditional approvals and licenses .
22 trillion won in damages over 5 years… “Strong protective measures are needed”
Most of the leaking technologies flow to China, and the industry estimates that the damage caused by the leakage of national core technologies in the past five years has won 22 trillion. The government is trying to amend the Industrial Technology Protection Act to prevent such damage.
In 2004, Korea overtook Japan to become the world’s leading exhibition country, but last year it lost its place to China for the first time in 17 years. In the industry, China is expected to rank first in the world in the small and medium-sized OLED field by 2024. Combining data from the Korea Display Industry Association and market research company Omdia, China ranked first with 41.5% of the display market share by country in terms of sales last year, with Korea second with 33.2%, one step behind. Its presence has grown so much that it cannot be ignored. Recently, Samsung and LG are withdrawing or downsizing their LCD business. It seems we need to prepare firmly for China’s move to become a strong OLED player after LCD.
Reporter Jo Ara at Hankyung.com rrang123@hankyung.com
