Miracom's Strategy for Overcoming ICT Investment Barriers in SMEs

While supply chain disruptions have prompted international corporations to reconsider their global sourcing strategies and explore new supplier regions, this situation presents opportunities for SMEs in Korea. By implementing smarter management processes, automation systems, and digital and IoT technologies, Korean suppliers have demonstrated agility, enabling them to respond faster to customer demands by designing, developing, and producing customized products within shorter cycle times. From your perspective, how crucial is it for companies to establish a robust ICT environment to remain competitive? Additionally, how advanced is the Korean ICT ecosystem?

ICT serves as the backbone of a company. If you have a solid backbone, you gain immunity to external factors; without it, you become vulnerable and volatile to external influences. To use a bodily metaphor, having physical strength through a solid backbone is essential. Neglecting this function leads to various deficiencies, making you more fragile and susceptible to other factors. In this context, I believe ICT-related investment and capital serve as the backbone for our company.

Historically, ICT investments were primarily made by Korean MNCs, while SMEs lagged behind, not prioritizing ICT. However, there is now a global recognition that competitiveness requires a strong ICT foundation. If conglomerates and midsize companies rely on ICT specialists like us, they can advance their ICT systems efficiently, creating a virtuous cycle that enhances productivity. This is similar to individual health, where appropriate advice and training from a trainer are necessary to maintain strength and physical health.

Investment in ICT has traditionally been a luxury for SMEs, as they often lack the capital and financial resources to implement computerized systems and automation. How does your company overcome these challenges to penetrate further into the market?

It is true that ICT investments have historically been low on the priority list for Korean SMEs. To change this, we focus on visualizing the tangible benefits of ICT investments. We have the expertise to explain, from a comprehensive perspective, the quantitative and qualitative benefits of ICT systems. This helps SMEs understand how these investments can enhance their productivity, yield, cost efficiency, quality, and customer satisfaction.

We have received positive feedback, evidenced by the increasing adoption rates of our solutions among our customers who follow our advice and recommendations, even though success isn’t guaranteed every time. This is partly because small and medium-sized enterprises often supply to conglomerates, their regular clients. Korean MNCs not only care about their own growth but also foster an ecosystem that encourages the establishment of smart factories through ICT.

Furthermore, the CEOs of SMEs are increasingly from a younger generation that is more open to innovation and prioritizes ICT systems. This shift in mindset has made it easier to promote and implement ICT solutions within SMEs.

When you look at manufacturing execution systems (MES), they often had to be implemented on-premise, requiring significant investment in IT infrastructure. Today, we're seeing the emergence of new technologies such as cloud computing, which allows systems to be hosted in the cloud, minimizing costs. Additionally, AI is enabling the automation of certain parts of IT systems and infrastructure. From your point of view, how do you think AI will impact the MES ecosystem? Secondly, what technological breakthroughs do you expect to see within the next five years?

I believe AI will have a seismic impact on the MES ecosystem. Companies aiming to innovate and implement changes need to use MES as an intermediate phase before fully integrating AI. AI relies on massive data sets to produce intended outcomes, which are often defined by the MES system. Skipping the MES phase would make establishing AI nonsensical.

In the past, there was an "English divide" during my college years, where those fluent in English could marry better, secure superior positions, and climb the social ladder, while those who were not fluent faced greater income disparity. This divide was confined to individuals.

Now, we have transitioned into an era of digital divide, which refers to the disparity between conglomerates and SMEs. Conglomerates can invest heavily in ICT for digital transformation, enhancing productivity, while SMEs that lag behind in ICT implementation face significant disadvantages. This digital divide is primarily at the enterprise level.

I believe the next significant shift will be towards an AI divide. Companies that harness AI will remain competitive, while those that do not will face substantial challenges. It will be an all-or-nothing scenario, impacting society on a broad scale. From a company's perspective, moving towards AI is essential, but you cannot skip the digital divide phase. The adoption of AI will become critical for maintaining competitiveness in the future.

Which industry do you think will be most impacted by the digital divide and AI divide?

I personally believe that no sector will be immune from the digital divide. However, industries that require high precision, complexity, and extensive data processing to create added value will be the hardest hit. For example, the semiconductor industry will be most affected, followed by the automobile and battery industries.

If we assume the y-axis represents the technological hurdle, with the highest hurdle set at 100, industries at the top of this index, such as semiconductors, will be most impacted by the AI divide. These industries require complex data processing to create added value, and failing to adopt AI will result in significant disadvantages in this all-or-nothing scenario.

While sectors lower on the index may face slightly different timelines, they too will need to navigate the AI divide. The difference in timelines will likely be less than two years. If companies do not quickly become fast followers in adopting AI, they will inevitably fall behind.

Your company specializes in semiconductors. In recent years, however, we've seen you expand your suite of solutions to include automotive, chemical, and even the food sector as one of the latest additions. Looking to the future, what industries will be key for your growth? You've initially been in the semiconductor field. Why do you think you can be competitive in other sectors where competitors have been operating for a long time?

If we consider the scope of competition, think of it as an Olympic stadium where runners compete in the 100-meter dash. All runners aim to be number one, putting in their best efforts based on their strengths and capabilities. Some will excel, while others might come in third or fourth. This level playing field helps us grow together. Similarly, we aim to establish a dominant foothold in the market by focusing on four key areas: quality, cost, delivery, and service. We cooperate and sometimes compete with our industry peers to achieve this.

To enhance our quality, we strive to thoroughly understand our clients' processes to integrate them seamlessly into our platform. One thing I always emphasize to my employees is that they need to understand these processes even better than our clients. This deep understanding allows us to offer superior solutions and remain competitive in various sectors.

Miracom's Nexplant MESplus is a platform-based integrated manufacturing execution solution that includes modules such as QMS, EES, and FMB. It provides essential functions for smart factory implementation, including production management, data visualization, quality and yield management, and machine optimization. This solution is available both on-premise and in the cloud to accommodate various business needs and can be deployed on existing platforms in shorter time frames. Could you share examples of successful implementations where you helped your customers achieve better competitiveness?

Generally speaking, semiconductor plants follow specific processes, which include parameters like time, pressure, temperature, gas, and chemicals. The semiconductor industry has a threefold defense system to check quality before, during, and after the process. For a typical company, implementing such a system is very time-consuming and requires significant effort, money, and expertise. In this regard, we offer an efficient and cost-effective platform suitable for both SMEs and conglomerates.

This platform, referred to in industry terms as an Equipment Engineering System (EES), is integrated into our Nexplant MESplus. It is not a standalone system but includes modules such as RMS and FDC, which can be customized according to customer preferences. Customers can opt for individual modules or a complete package.

Cost-wise, using our platform can reduce expenses by a factor of 10. Most of our customers are either currently using these models or are reviewing their implementation. For Outsourced Semiconductor Assembly and Test (OSAT) providers, having these modules and systems is essential, as their major clients are global semiconductor chip producers.

Japanese SMEs often show reluctance to adopt automation and digital technology, primarily due to cybersecurity concerns. In the semiconductor sector, where trade secrets are crucial, these midsize companies are particularly wary of security risks. Regarding your cloud model, how do you ensure the safety of the system against robust cyberattacks and keep information absolutely confidential?

You've mentioned cybersecurity concerns from the Japanese perspective. In my 30 years of experience as a cybersecurity expert, there's a joke that a cybersecurity breach doesn't just damage your brand—it brings humiliation. I'm unsure what specific cybersecurity risks Japanese companies are worried about, but I doubt they can handle these risks better than specialized companies like ours. For cloud providers like AWS or Google, trust and confidence are paramount. The entire industry relies on trust, and lacking it would compromise everything.

The trend is similar in Korea. In the past, owning cars and houses was psychologically reassuring, especially in East Asian economies. The concepts of sharing and renting were unfamiliar. However, today's CEOs belong to younger generations more familiar with sharing products and services. I believe the cloud service industry will continue to thrive, driven by trust in services provided by companies like Amazon and Microsoft and the growing acceptance of sharing. In my view, the Japanese still have a stronger preference for ownership and on-premise solutions compared to Koreans.

You recently received the $20 million Export Tower award. With the onshoring of battery and semiconductor manufacturers, how do you see the overseas market as a potential for your solutions?

Korean companies are engaging in significant value cooperation to go global. Our primary target regions are Southeast Asia, the US, and Europe. Although the Chinese economy is large, the uncertainty and difficulty of conducting business there are increasing.

In 2023, Miracom's revenue reached $195 million, with plans for 30% year-on-year growth. What are the key factors for achieving these objectives, and which industries will you focus on in the next five years?

As I mentioned, our focus will be on the semiconductor, battery, food and beverage, automotive, and chemical industries. Leveraging our accumulated expertise, we are confident that we understand these processes better than their in-house employees. We are also well-equipped to collaborate with local companies overseas. Under our slogan of becoming the world's fastest smart factory total solution provider, our primary target is to reach $1 billion in revenue by 2030.

For industries or potential clients that already have a working system, let's say they've invested in Oracle and have a certain MES infrastructure, how do you ensure compatibility with the products you provide? Is compatibility a crucial aspect of your development? Can you provide an example of compatibility with an enterprise that has already made investments and doesn't want to start from scratch?

There's a slight distinction between general ICT infrastructure and smart factory infrastructure. Upgrading the level of smart factories is relatively easier if a company is already equipped with Oracle's database, for instance. However, even with existing infrastructure like databases or storage, without a deep understanding of processes integrated into our platform, upgrading to a higher smart factory level becomes challenging.

Smart factories are categorized into five levels, akin to autonomous vehicle levels. Level five represents complete autonomy, analogous to a vehicle requiring no human intervention. Our approach is to advance companies from level zero to level one by enhancing their ICT infrastructure. We evaluate companies at level one to advance them to level two by intervening, such as resolving functional or network issues with the database. We aim to progress our clients one rung at a time on the ladder, avoiding skipping stages. Our strength lies in providing precise consultations to maximize profits and efficiency for our clients by meticulously assessing their current status and defining their target goals. Essentially, our ability to visualize processes is our advantage.

While physical investments like equipment or construction are visible, ICT investments and their results are invisible. Our main challenge lies in visualizing how ICT can create benefits and added value for our clients. To achieve this, we need to demonstrate competence and potential tangible results for our clients by visualizing them with a perfect understanding of their processes.

Of course, not every endeavor succeeds. There are various factors affecting success rates, including competitors with better insights into the industry, cost issues, and challenging demands from clients or customers.

Recently, I've been advising clients to integrate ESG factors into their platforms. Until now, factors like productivity, yields, customer satisfaction, and cost were primary considerations, but now we must integrate ESG into their platforms. It's challenging for small and medium-sized enterprises to individually reduce carbon emissions, but this extends beyond energy consumption to eliminating carbon emissions and addressing climate change. I encourage my customers to use our platforms to realize their core essence as a business.

There are always hidden inefficiencies or waste in factories that are invisible. Our smart factory aims to unveil these hidden factors by lowering surface barriers. Once the issues are visible, we need to help them effectively solve the problems. However, since hidden factories will only grow in size in the future, companies must be more agile in addressing them. If they are slow to address these hidden factories, they won't be able to stay afloat. Our smart factories serve to help companies visualize these hidden factories so they can address them promptly.

Please imagine that we're conducting another interview with you on the last day of your presidency, just before you hand the company over to the next generation of executives. What ambition or objective would you like to have achieved during your time as president?

By that time, I would take immense pride in the fact that through Miracom’s solutions, our customers have had their hidden factories unveiled, resulting in the creation of added value. If we earnestly endeavor to enhance the value for our customers, I am confident that they will recognize our worth. Moreover, qualitative and quantitative goals, such as reaching $1 billion by 2030, will naturally follow suit. By prioritizing the delivery of high value to our customers and bolstering our competitiveness in cost, delivery, and quality, I aspire to instill this spirit in the next generation.

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