Union Material is showing strong performance. Amid escalating trade tensions between the United States and China, news that China is considering controlling the export of technology related to rare earth magnets appears to be influencing the stock price. If China fully weaponizes rare earth resources, domestic industries such as electric vehicles and secondary batteries are expected to be affected.
As of 11:12 AM on the 25th, Union Material is trading at 4,360 KRW, up 9.81% from the previous day.
According to related industries, China is recently pushing forward a revision bill to control the export of permanent magnet manufacturing technologies, including rare earth elements such as neodymium and samarium-cobalt. With the rapid increase in demand for electric vehicles, the value of rare earth elements is growing daily. The electric motors in electric vehicles rely on permanent magnets made from rare earth elements. Since the magnetism of rare earth permanent magnets drives the electric motor, the performance of electric vehicles is ultimately determined by these rare earth permanent magnets.
Union Material operates in the ferrite magnet business. It is considered an essential industry for the development of the parts industry as a material for motors or compressors used in automotive electronics and home appliances. Ferrite magnets used in automotive motors must undergo long-term durability testing to ensure reliability and safety before they can be applied. Due to the nature of the automotive industry, there are high entry barriers, including strict delivery and quality requirements from parts manufacturers.
As a typical B2B business, parts development is possible through cooperation between parts manufacturers and material suppliers, making close relationships between these parties essential. It takes a long time for new companies to enter and establish reliability.
Ferrite magnets are used in motors that improve vehicle convenience, safety, driving performance, and fuel efficiency, and recently, more than 50 motors are installed in vehicles. Since they are used in various motors, the usage of ferrite magnets is expected to continuously increase alongside the development of new automotive motors. Union Material supplies motors to Hyundai Motor Company, Kia, GM Daewoo, Volkswagen, GM, Ford, BMW, PSA, and others. When developing new vehicle models, motor development as an automotive electronic component begins simultaneously with the development of Union Material’s ferrite magnets. The company’s market share is estimated to be about 10-12% globally and about 30% domestically.
LG Innotek won the bronze medal at the US 'Edison Awards 2023' for its world's thinnest ultra-thin magnetic component, 'Nexlim.' Nexlim is a magnetic component used in TV power modules and vehicle power chargers, among others, to change voltage or eliminate unnecessary signals caused by current fluctuations. It minimizes power loss due to heat generation, thereby enhancing energy efficiency in electronic products and electric vehicles. Based on the core magnetic component technology secured during the development of Nexlim, LG Innotek succeeded in developing the third-generation ferrite magnetic material (X-3). X-3 can reduce energy loss by up to 30% more than X-2, and it is expected to play a role in miniaturizing electric vehicle components.
The electric vehicle industry is considering ways to reduce dependence on China for rare earth elements. Ferrite magnets are emerging as an alternative.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
