[Click e-Stock] "Poongwon Precision Localizes Key OLED Component... Challenges Japanese-Dominated Market"

On December 23, KB Securities analyzed that Poongwon Precision is targeting the Japanese-dominated market by localizing the fine metal mask (FMM), a key component of organic light-emitting diode (OLED) displays.

Poongwon Precision manufactures and sells FMMs, open metal masks (OMMs), stick bar masks (SBMs), and accessory sticks (ACCs) based on its metal sheet processing technology. The company is now on the verge of entering the FMM market, which has been monopolized by Dai Nippon Printing (DNP) of Japan.

Kim Hyungyeom, a researcher at KB Securities, stated, "Poongwon Precision is leading the localization of the FMM market, a key component of OLED displays currently monopolized by Japan's DNP, based on technology accumulated since 2010." He added, "The company has moved beyond the stage of simple attempts, and its entry into the actual supply chain is becoming visible."

However, the company’s performance remains sluggish. Poongwon Precision’s cumulative sales for the third quarter of this year were 22.3 billion won, down 44.8% year-on-year, while operating losses continued at 12 billion won. Regarding this, Kim explained, "The current performance reflects cost burdens incurred prior to mass production," and assessed, "This is an unavoidable phase that occurs during technology development and preparations for mass production."

The market is paying attention to the fact that Poongwon Precision has established a mass production system for 6th-generation half-cut FMMs using its proprietary technology. Kim emphasized, "The company has successfully completed the development of FMMs for 6th-generation OLED substrates for major domestic panel manufacturers and is now focusing all efforts on final quality certification and mass production preparations. This suggests that entry into the actual OLED supply chain is imminent, going beyond mere prototype development."

If Poongwon Precision succeeds in the mass production and supply of FMMs for 6th-generation OLED substrates, it is estimated that the maximum market size that can be captured by replacing existing overseas suppliers will reach approximately 300 billion won. Kim added, "The company stands at a turning point where its performance and corporate value could fundamentally change depending on whether it is adopted by customers."

Poongwon Precision’s growth story is not limited to smartphones. As the application of OLEDs expands to IT devices such as tablets and laptops, the company is also developing ultra-high-resolution FMMs for 8.6-generation IT OLED lines, which require a resolution of 1000 ppi. Kim explained, "In July last year, Poongwon Precision was selected as the executing agency for a national project to develop 1000 ppi high-resolution FMM technology for G8.6H OLEDs. In April this year, the company completed the establishment of manufacturing facilities for 8th-generation FMM photomasks, advancing its technological sophistication."

He further predicted, "If Poongwon Precision succeeds in securing customers for its 6th-generation FMMs, it will become an important stepping stone to expand into the next-generation IT OLED market."

Positive changes are also being observed in terms of value chain localization. It is understood that Hyundai BNG Steel is currently undertaking the localization of Invar (a nickel-iron alloy), the key material for OLED FMMs. Kim analyzed, "If the value chain from Invar as the material to FMM as the component is fully localized, Poongwon Precision’s cost competitiveness and supply stability will be significantly strengthened."