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Miwon Commercial brings innovation to the advanced fine chemicals market

Interview - July 10, 2024

The Korean specialist in surfactant products, photosensitizers, and UV stabilizers aims to venture into the OLED and battery markets through portfolio diversification and partnerships.


Through the success story of Korean MNCs who have dominated both consumer markets and high-tech industries, Korea saw the emergence of domestic suppliers. As the Korean industry continues to grow into a key global player, critics claim that the SME sector might find itself ‘sandwiched’ between new and established manufacturing powers that will limit their international expansion. To what extent do you agree with this argument? How can SMEs better diversify their client base and reduce their dependence on Korean MNCs?

Overall, I find the sandwich theory to be somewhat flawed in its application to our current situation, as it presents both merits and challenges. Firstly, speaking to the merits for Korean SMEs, our ability to supply to major MNCs or conglomerates within Korea positions us as price-competitive in terms of quality and cost. Moreover, companies of our size, being small to medium enterprises, are already deemed qualified and capable of serving as suppliers for Korean MNCs. We have made strides in penetrating foreign markets and attracting prominent clients on a global scale. However, several challenges persist for Korean SMEs when competing with global counterparts. Firstly, there are concerns regarding security in marketing and logistics channels. Secondly, meeting the stringent requirements of overseas clients poses a significant challenge. Thirdly, within the unique corporate culture of the Korean ecosystem, the services and products of small-sized suppliers are often exclusively monopolized by certain conglomerates, limiting our ability to diversify our clientele. This monopolization is a hindrance to our growth and is not a favorable development. As a tier two vendor, our focus should be on expanding our reach to global clients rather than becoming complacent with the Korean market. Currently, we are securing clients in Taiwan, Japan, and China. However, the Chinese government's extensive support to their SMEs grants them unparalleled price competitiveness, posing a formidable challenge to Korean counterparts. Nevertheless, there is hope as Korean companies are devising unique strategies to develop their own products and attract clients.

Additionally, if Korean MNCs and SMEs foster cooperative partnerships, rather than maintaining a unilateral or hierarchical relationship, Korean SMEs will be better equipped with global competitiveness. This symbiotic relationship will also facilitate the development of Korean MNCs.

In conclusion, I do not believe that Korean SMEs are sandwiched between conglomerates as we are not overly reliant on them. However, it is undeniable that Chinese competitors are swiftly rising on the global stage, buoyed by government support. Given the geographical proximity and focus of manufacturing on Asian economies such as Korea, Taiwan, Japan, and China, it is easier for these economies to reach overseas clients. While the manufacturing industry has been bolstered by the domestic market, the materials industry rarely experiences monopolization or exclusive supplier arrangements, enhancing our ability to diversify our supplier portfolio and cater to various MNCs. Hence, I disagree with the sandwich theory concerning heavy reliance on Korean conglomerates.

Ultimately, industry-specific characteristics are pivotal. The global semiconductor industry, for instance, is predominantly dominated by Asian countries, with the Korean semiconductor industry accounting for almost half of the global market share. Serving Korean companies is akin to serving the global market. Moreover, resilience and diversification are crucial aspects, as evidenced by the Korean-Japan dispute that significantly impacted the semiconductor industry a few years ago. Timely and adequate material procurement is imperative but challenging, leading many customers to seek multiple suppliers. This aspect presents opportunities for us to supply diverse clients, making the semiconductor industry particularly fascinating and unique.


The US attempting to shift this dynamic with the implementation of the Chips Act and supply chain realignment, which President Joe Biden has termed the "right on time" supply chain—a response to disruptions in semiconductor supplies for the automotive industry. What opportunities does this onshoring trend towards the US market present for Korean SMEs?

Over the past few years, we've witnessed significant global developments, including the US-China trade war, Japan's unilateral export ban on Korea, and the emergence of a trilateral alliance aimed at reducing China's influence in the supply chain. As you mentioned, the US administration's fiscal support for the battery and semiconductor industries aims to attract investment to the US.

There are several perspectives to consider regarding these global developments. Firstly, as Korean MNCs enter the US market, encouraged by US investments to attract foreign suppliers, I believe these opportunities will extend to SMEs. This shift will offer abundant new business prospects, including joint ventures with US-based companies. Secondly, semiconductor production tends to be regionally allocated, leading to inefficiencies in global supply chain realignment. Thirdly, there's the risk associated with entering the US market alongside industry competitors. Despite current fiscal support from the US administration, uncertainties loom, especially with the upcoming US election in November. Even if the Biden administration retains power, uncertainties persist regarding the continuity of fiscal support for overseas chip makers and cell manufacturers. While most conglomerates are hesitant to discuss this publicly, insiders are aware of the ongoing uncertainties. As tier two companies, our fate hinges on how the ecosystem evolves.

The US-China dispute and the IRA-induced manufacturing onshoring pose both opportunities and risks for us. Given our existing supply relationships with manufacturers, we anticipate supplying to these new manufacturing sites in the US. This presents an opportunity. However, there's also risk due to the prevailing uncertainties. If the US administration shifts its direction, the substantial investments in US manufacturing sites may not materialize as expected. For example, delays in battery plant construction could occur. Fortunately, as tier two companies, we are somewhat insulated from these risks. Nonetheless, we still face some uncertainties.


Due to increased inventories and reduced demand from monetary policy tightening, the semiconductor industry faced a five-quarter significant downturn. However, 2024 appears to be the year of comeback. This positive outlook is shared by the Taiwanese giant TSMC who expect “2024 to be a healthy growth year for the company, supported by robust AI demand”, said CEO C.C. Wei. How do you foresee the evolution of the semiconductor sector and your company over the next 12 months?

While the electronics chemicals department constitutes the largest share of our growth and revenue, our personal care ingredients remain a robust cash cow. We continue to witness steady growth in the personal care ingredient division. Additionally, our functional chemical division, propelled by the IT boom, is benefiting from the thriving IT industry. While electronics chemicals indeed contribute significantly to our revenue and growth, they are not the sole drivers.

Furthermore, during the Covid-19 outbreak in early 2020, we experienced heightened demand for IT appliances as people transitioned to remote learning and work setups. This surge in demand for displays and semiconductors among our clients translated into exponential revenue growth for us. However, since 2023, as anticipated by market experts, an imbalance between supply and demand emerged. For instance, Samsung witnessed a rise in inventories and subsequently had to reduce them, resulting in a temporary downturn in the semiconductor industry—not due to lack of demand, but due to supply-demand imbalance. As you noted, TSMC's optimism about the IT industry's market expectations, driven by exponential demand for AI, High-Performance Computing, IoT devices, and autonomous vehicles, reflects market sentiments. Therefore, it's not a matter of if the sector will regain momentum, but rather when it will happen.

In terms of cell manufacturing, we experienced growth in 2021, which plateaued in 2023 and onwards. We anticipate continued flatline growth in this sector for the current year. On the other hand, in personal care ingredients, our development of new products, along with effective management of logistics and supply chain challenges, has already yielded growth.



Miwon Commercial was established in 1959. Now, it's integrated into a larger group with various subsidiaries targeting similar customer bases and fields. How does Miwon Commercial position itself within the group, and what synergies are you creating?

The best way to address this is to refer to our historical documentation, published four years ago in 2020, available on our website in Korean. However, I'll provide a brief summary of our journey. Originally named Miwon Commercial, we began as a chemical trading company in 1959. By the early '60s, we transitioned into manufacturing. Initially, our primary focus was sulfur-related products due to the bulk nature of the chemical, presenting significant business potential and relatively easy market entry. From sulfur products, we diversified into surfactants, leveraging sulfonation processes. This expansion naturally led us into the cosmetics and general personal care ingredients sector.

Our venture into electronic chemicals stemmed from our strategic aim to diversify our business. In the early days of Korea's industrial development, many essential goods were imported. We identified imported materials with high value and sought opportunities to manufacture them domestically. This led to the inception of energy curing materials, somewhat related to electronic chemicals, followed by ventures into painting materials. The underlying technology in painting materials involves UV light-induced hardening, which further propelled our interest in high-value business sectors. However, building our electronic chemicals business proved to be a lengthy endeavor, spanning about two decades due to formidable technological and customer relationship barriers. We invested significant time in nurturing customer relationships and developing technological capabilities. Our growth strategy primarily entails organic expansion within related sectors. The acquisition of affiliates such as Dongnam Chemical and Taekwang Fine Chemical was also a part of this organic growth strategy, facilitated by business relationships and partner requests for assistance.

Regarding synergies among Miwon affiliates, it's worth noting how we established separate entities. Two of Miwon Commercial's business units evolved into Miwon Specialty Chemical and Miwon Chemical. When making decisions to spin off business units, we carefully selected divisions with sufficient potential to operate independently. Consequently, while we maintain some level of interdependence, we are not overly reliant on each other.

In our six decades in the industry, Miwon has maintained a laser focus on precision chemicals, despite the typical industry portfolio diversification seen in companies of similar age. What began as a sulfur trading company has expanded into surfactant production, energy curing solutions, and electronic chemicals. This diversification was made possible by the expansion of our existing clients' business portfolios, reflecting their trust in our capabilities. Presently, most of our industry portfolio revolves around manufacturing. We've developed proprietary core technologies, enabling mass production and distribution to our clients. Our firm mission revolves around continually developing new products and adding them to our business lineup, one step at a time.


You initially provided various solutions primarily for back-end processes, focusing on the i-line and G-line. However, we've observed a transition towards front-end processes, especially in lithography using ultraviolet light. Additionally, you were indirectly involved in the ecosystem of 3D NAND chips for Samsung. Could you elaborate on your role in semiconductor production today, and how you're preparing for the technological challenges associated with front-end processes, particularly in 3D architectures involving stacking multiple layers?

Our journey towards technological excellence and company growth began when we applied the initial g-line technology to the LCD business. Since then, we've expanded into i-line, KrF, ArF, and next-generation materials. The key lies in understanding our clients' precise needs, including the desired physical properties. We've engaged in joint development projects to create materials tailored to their requirements, leveraging our strong client relationships. This includes advancements in NAND technology and the development of next-generation EUV materials. Rather than preemptively suggesting solutions to our clients, we respond to the semiconductor industry's evolving requirements, supporting our clients in product development and scaling up production. This collaborative approach to technology development has been our pattern for the past 15 years, and we anticipate its continuation in the future.

Major conglomerates like Samsung and SK Hynix are aware of our capabilities, and they often prefer Korean products over Japanese ones. However, the majority of our joint development projects involve tier-one companies, which constitute 95% of our product portfolio, with only around 5% involving upper-level clients.

In terms of joint development, we typically don't engage directly with manufacturers. For instance, in 3D technology, our role is critical as we supply key materials, but our collaboration is primarily through tier-one clients rather than direct involvement with manufacturers like Samsung.


When it comes to ArF or EUV, the majority of these materials are sourced abroad, often monopolized by Japanese chemical giants. However, LG Chem is now entering the market. As you ascend the value chain and enhance your technological capabilities, what's your strategy for internationalization? How do you aim to move beyond indirect involvement in the supply chain management of SK Hynix or Samsung, and actively engage in procurement with global foundries?

Indeed, Japanese companies have traditionally excelled in manufacturing semiconductor advanced materials, and Korean chip makers have heavily relied on these imports. However, following the unilateral export ban imposed by Japan in 2019, which resulted in significant supply chain disruptions, Korean companies have recognized the necessity of domestic production for critical semiconductor materials, reducing reliance on Japanese imports. We've witnessed a growing presence of US or Korea-based PR companies in the Korean ArF market, and this trend extends to the EUV market as well. Regarding our international strategy, I see three key aspects. Firstly, we prioritize engagement with local tier-one companies. Secondly, we aim to directly secure Japanese clients to some extent. Thirdly, we're focused on attracting third-party players, particularly major US-based corporations. Diversifying our client base is crucial, given that 30 to 40% of our revenue originates from abroad. Across our divisions, including semiconductor, cell, and personal care ingredients, international markets contribute significantly to our revenue streams.

To gain insight into your vision, particularly regarding the electronic and functional technical business units, let's imagine ourselves five or 10 years into the future. What objectives have you set for yourself? If we were to have this interview in 2030, what milestones would you hope to have achieved?

When it comes to our corporate ambitions, our primary goal is to satisfy our customers and fulfill their needs. While expanding our customer base remains essential, I must admit that setting clear statistical objectives might necessitate significant efforts to achieve them. Our focus over the past 60 years has been on continuous growth in both size and competitiveness, while leveraging our unique strengths. In terms of size, I envision doubling our current size over the next five to 10 years, ultimately becoming a billion-dollar company.

From a business perspective, we're looking to venture into the OLED display market. In the semiconductor realm, our strategy involves maintaining strong relationships with existing clients while embarking on a technological journey to better meet their evolving needs and expectations. In the battery sector, given Korea's unparalleled ecosystem in battery technology, bolstered by the presence of the three largest cell makers alongside Chinese contenders, we aim to further develop products and expand our business through strategic partnerships with these cell makers, anticipating meaningful outcomes in the future.

As for personal care ingredients, our aim is to diversify our product offerings. With ongoing research involving numerous products already in the pipeline, our goal over the next decade is to introduce these products to the market, thereby significantly contributing to our revenue growth.

Overall, we aspire to foster a working environment that fosters productivity and innovation. Ultimately, we aim to be an unparalleled company with 70 years of history in precision chemicals, setting new standards in the industry.


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