[Company Visit] "From Semiconductors to Secondary Batteries"... Value Up with Materials at MK Electronics

Bonding Wire Market Solid... "Positive Expansion into Automotive Semiconductors and Other Areas"
Development of Solderable for HBM Response... "Expecting Results in 2025-2026"
"Securing Growth Engines in Semiconductor Testing and Secondary Battery Anode Materials"

"Last year was not favorable due to the worsening market conditions, but looking at the sales in the first quarter of this year alone, which reached around 140 billion KRW, we expect to easily surpass the 2023 figures. Especially for new businesses, since the profit margins are high, we anticipate they will contribute to improving operating profit margins in the future."

On the 11th, MK Electronics made these remarks while presenting a positive outlook for this year at an investor relations (IR) meeting hosted by the KOSDAQ Association at their headquarters in Pogok-eup, Cheoin-gu, Yongin-si, Gyeonggi-do.

The exterior view of MK Electronics headquarters located in Pogok-eup, Cheoin-gu, Yongin-si, Gyeonggi-do. Photo by Hyunseok Yoo

MK Electronics is a semiconductor materials company specializing in bonding wires and solder balls, which electrically connect semiconductor chips with printed circuit boards (PCBs) and lead frames. In the first quarter of this year, on a separate basis, the company recorded sales of 139 billion KRW and an operating profit of 2.5 billion KRW, representing increases of 20.53% and 186.03% respectively compared to the same period last year.

Bonding wires are produced through processes including refining, melting and casting, drawing, heat treatment, and winding. The company explains that advanced technology is essential because the raw materials must be processed into wires of uniform thickness and very thin form. During a visit to the manufacturing facility, employees were seen working in dustproof suits. A company representative explained, "If dust or other particles enter, the wire can break or cause shorts."

There are concerns about demand contraction in the bonding wire sector due to the expansion of the high-bandwidth memory (HBM) market. However, the company emphasizes that this is not a cause for worry. Demand for bonding wires and solder balls correlates directly with semiconductor chip production volume. Kim Hyeong-ju, team leader at MK Electronics, said, "If you look at our sales, they have been continuously increasing due to the expansion of the semiconductor market. For automotive semiconductors beyond the existing market, stability is crucial, and since electric vehicles and autonomous driving require more semiconductors than traditional internal combustion engines, there is no problem."

Bonding wire, the main product of MK Electronics. Photo by Hyunseok Yoo

Additionally, the company states that they are well-prepared to respond as they have developed materials for next-generation semiconductors such as HBM. MK Electronics developed low-temperature sintering solder balls applicable to HBM last year. He added, "We are currently collaborating with various fabless companies and expect concrete results around 2025 to 2026."

MK Electronics is expanding its business areas from its traditional core bonding wire and solder ball businesses to socket test materials, paste, recycled tin, and silicon anode materials. For example, PAW (palladium alloy wire), used in socket test materials, began research and development in 2022 and successfully produced the first samples last year. This year, it passed evaluations and is awaiting approval from some companies.

Team leader Kim said, "This product was previously entirely dependent on imports, but we developed it at the request of our clients. This product has a high profit margin, and since scrap is generated, it can be remanufactured through a recycling system." He added, "We have partially established a mass production line and plan to expand it further by 2026."

The bonding wire production facility of MK Electronics. Photo by Hyunseok Yoo

Solder paste is also a promising area. Solder paste is an adhesive mixed with fine solder powder and flux used for mounting components on electronic substrates. He emphasized, "The solder paste market was dominated by foreign companies. Currently, our specifications meet customer requirements, and we are conducting promotions. We expect full-scale commercialization in the second half of this year."

MK Electronics is also developing silicon (Si) anode materials for secondary batteries. He explained, "Our anode materials satisfy most of the customer requirements, from specifications to mass production feasibility, yield, and price competitiveness. Although not yet at the mass production stage, the competitiveness is sufficient." He added, "For 40 ampere-hour (Ah) cells, we are testing with four companies, and we are in contact with one company regarding all-solid-state batteries."

Among all, the area expected to bring the most benefit from business expansion is profitability improvement. MK Electronics had low operating profit margins due to using expensive raw materials such as gold. However, since the new items have higher profit margins compared to existing ones, they are expected to contribute positively to performance.