[Asia Economy Reporter Hyungsoo Park] As the United States has effectively declared a new Cold War against China and entered into full-scale confrontation, emergency measures have been triggered to secure rare earth elements. This appears to be the reason why the stock price of Novatec, which has secured a stable supply line of rare earths, has recently been rising.
At 9:57 a.m. on the 27th, Novatec was trading at 23,550 KRW, up 14.04% from the previous day.
The United States, having entered a new Cold War era with China, is preparing for a long-term conflict. One of the top priorities is achieving independence in rare earth elements. Rare earth elements are widely used commercially in advanced electronic components such as semiconductors and smartphones, and are core materials for next-generation strategic weapons like hypersonic and laser weapons, F-35s, missiles, and nuclear submarines. Since China currently virtually monopolizes the market, the "weaponization of rare earths" is one of the biggest concerns for developed countries.
Founded in 2007, Novatec manufactures permanent magnets used in electronic devices such as smartphones and tablet PCs. The neodymium magnets produced by Novatec are mainly used in mobile device bodies and accessories. Neodymium magnets generate more than twice the magnetic force compared to ferrite magnets made with iron oxide. Novatec holds patents for shielding magnets, which can direct magnetic force only to necessary areas. As electronic devices become more advanced, demand for shielding magnets is expected to increase. In particular, with the growth of front-end industries such as artificial intelligence (AI) devices and electric vehicles, many business opportunities are anticipated. Novatec provides designs and solutions suitable for high-quality specifications required by smart terminals such as smartphones and tablet PCs from Samsung Electronics and LG Electronics.
With growing societal demands for eco-friendliness and energy conservation, various green businesses and the electric vehicle market are also expanding. Since permanent magnets are used, Novatec has significant potential to enter diverse front-end markets.
In the permanent magnet market, technological capability, price competitiveness, and smooth raw material supply are key competitive factors. Considering that rare earth supply conditions vary according to Chinese government policies, Novatec established a rare earth sintering joint venture with a Chinese company.
Last year, Novatec also established a Vietnamese subsidiary, Novatec Vina. Although magnets such as neodymium were produced at domestic factories, production bases are being relocated to Vietnam to meet increasing overseas demand. Once the Vietnamese production plant is completed, the annual production capacity will be about four times the current volume.
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