[Report] Semiconductor Root Companies Soar to Record Sales During Japan Export Restrictions... Wings Despite COVID-19

Dongwon Parts, Sales Increase Amid Crisis Through Establishment of Integrated Production System and Smart Factory Adoption

Cho Deok-hyung, CEO of Dongyang Parts (left in the photo), directly explaining the factory's internal equipment. Kim Ki-moon, Chairman of the Korea Federation of Small and Medium Business (center in the photo), and Sung Yun-mo, Minister of Trade, Industry and Energy (right in the photo). Photo by Ministry of Trade, Industry and Energy

[Asia Economy Reporter Kim Heeyoon] Due to difficult family circumstances, he had no choice but to attend a technical high school. The poor young man acquired skills through his characteristic diligence. He moved between various companies to learn diverse techniques. He was able to gain experience across the entire production process. Now, he has become the CEO of a small and medium-sized enterprise recognized for its technological prowess after successfully domesticating semiconductor equipment parts. This is the story of Cho Deokhyung, CEO of Dongwon Parts.

CEO Cho founded Dongwon Parts (then Dongwon Precision) in May 1997, when he was in his late 30s. Six months later, the International Monetary Fund (IMF) bailout occurred. After overcoming this crisis, opportunities arose. In 2017, 20 years after founding the company, he established a factory in Siwha Industrial Complex, Siheung City, Gyeonggi Province, with a site area of 6,698㎡ and a building area of 8,867㎡, and built an integrated processing production system (one-stop system).

After establishing a smart factory, annual sales exploded from 19.3 billion KRW in 2016 to 34.6 billion KRW last year. Although it is a small and medium-sized enterprise with about 200 employees, it is equipped with an in-house cafeteria and cafeteria, fitness center, dormitory, library, nap room, and nursing room (women’s lounge). There are more than 10 innovation clubs within the company.

Interior view of Dongyang Parts equipped with a one-stop system for batch processing production. Photo by Dongyang Parts

During a recent visit to the Dongwon Parts factory, about 50 processing machines were busily operating. Dongwon Parts is a specialized company that produces, processes, bonds, and post-processes core parts for semiconductor and display front-end equipment. On the 28th of last month, it was selected as a target for inspection by the Ministry of Trade, Industry and Energy’s Excellent Root Company program and opened its manufacturing site to the public.

As a company possessing welding root technology, Dongwon Parts recorded its highest-ever sales last year, fueled by the domestic localization boom in materials and parts caused by Japan’s export restrictions. Despite the impact of the novel coronavirus disease (COVID-19) this year, sales continue to rise.

CEO Cho explained, "After COVID-19, as American factories suspended operations, our customers increased orders to us in preparation for supply issues of key parts." He added, "As a result, production volume increased, and sales last month rose by nearly 30% compared to the average." Semiconductor welding technology is utilized in the electronics, automotive, and machinery industries.

Dongwon Parts is equipped with special bonding equipment such as laser welding machines, friction stir welding machines, and vacuum brazing, producing parts for semiconductors as well as LCD and OLED. Its main clients include global semiconductor companies like Lam Research and domestic companies such as SEMES and Koyoung Technology.

Dongwon Parts’ greatest strengths are its integrated processing production system and smart factory. CEO Cho said, "We might be the only company in the world that manufactures parts processing in a one-stop location." This system has been the foundation for smoothly maintaining quality and meeting delivery deadlines. Young employees are noticeable throughout the workplace.

CEO Cho cited 'people' as the core of company management. Due to the perception of manufacturing as a 3D (dirty, dangerous, difficult) industry, recruiting young talent is not easy. He hopes that government-level support and promotion will improve this situation so that innovative attempts can be made. CEO Cho is the head of a root company holding three domestic patents and two overseas patents related to semiconductor parts, and he himself is a certified master of mechanical processing.