Korean company aims to compete in extremely tough sector

“Foreign companies paid me a huge salary, so I wanted to live a more meaningful life for the rest of my days.”

Choi Jong-lip, 54, president of Auros Technology, said this is the reason he established his company, which manufactures semiconductor measuring devices, in 2009. On Wednesday, he and company directors Lee Hyeong-il and Lee Jun-woo got emotional reflecting on their resolution when they founded Auros.

○ Foreign companies dominate semiconductor device market in Korea

The Knowledge Economy Ministry selected Auros, with an annual revenue of just 10 billion won (9.2 million U.S. dollars), as a maker of next-generation products. The characteristics of semiconductor measuring devices explain the status of the Korean chip industry and the strong resolution of Choi and his staff needed.

Korea can be aptly described as a semiconductor powerhouse. In producing the world’s best products in the sector, however, the country imports most of the manufacturing equipment needed for semiconductors. Among the equipment, measuring devices are especially dependent on imports because extremely tiny semiconductor circuits require atomic precision.

Equipment parts require extreme accuracy that just a few top players can make, so the entry barriers of the semiconductor measuring equipment industry are extremely high. When it comes to equipment measuring overlay, the American company KLA Tencor used to occupy 99 percent of the global market.

Overlay measuring equipment confirms whether scores of oxide layers embedded with circuits are distorted. Naturally, the monopolistic products have high price tags.

Choi used to be head of KLA Tencor’s Korean branch, and later led the Korean office of Nano Matrix, another American overlay equipment company, and was promoted to vice president of the U.S. headquarters. Even while in the U.S. as vice president, he continued expanding the Korean branch by relocating the production lines and R&D center to Korea from the U.S. His idea was to have the company develop and manufacture products close to Nano Matrix’s biggest clients, Samsung Electronics, or Hynix Semiconductor (now SK Hynix).

About two years before the relocation to Korea, performance began to improve. But because a new company president decided to carry out all production and development in the U.S., Choi began to think of forming his own company and produce semiconductor measuring equipment in Korea.

○ Korea’s best semiconductor manufacturer

When Auros was founded with fewer than 10 staff, it received two very different responses. A small number of investors showed interest in the belief that developing technology in the semiconductor measuring equipment industry was essential, while skeptics did not think the company would not last long. Auros` founders gathered before its official launch, spending the entire night doing the company`s vision and motto.

“No Korean company can compete with us. Only a couple of other companies in the world can make what we do. So we called our company a national team. When we founded the company, the movie `National Team` hit the big screen. So we included a parody picture of the movie in our promotional materials,” director Lee Jun-woo said.

It would be wrong to think Korean semiconductor companies buy equipment from Korean companies rather than foreign. Measuring equipment is the core process of semiconductor manufacturing, and so patriotism does not help in this field. Director Lee Hyeong-il said, “People say it’s a good thing to develop technology and manufacturing in Korea. But when we try to sell our products, people don’t readily accept it. So we dedicated ourselves to developing the world`s highest quality product.”

Auros got desperate when parts companies could not meet the quality they wanted. Despite the obstacles, however, they succeeded. When the company sold OL-300n, an overlay measuring equipment, to Samsung Electronics for the first time in June 2011, they threw a party at the office and shared rice cakes and took a picture. Two months later, Hynix was also added to Auros` list of clients.

CEO Choi said, “I believe we can expand our share in the overlay equipment market at a rapid pace. We want to make our company the world`s best in three years.”

The company’s goal for this year is to introduce new products, including a wafer inspection system and film thickness measuring equipment, and let the world know their “made in Korea” products.

tesomiom@donga.com