Founded in 2002, LOT Vacuum has achieved significant milestones within a short timeframe. Following its listing on the KOSDAQ in 2005, the company embarked on an ambitious mission to bring its vacuum pump solutions to a diversified set of innovative industries.
After dominating labour-intensive sectors up to the 1990’s, the Korean industry advanced into consumer products and quality-sensitive fields, such as consumer electronics and automotive. Today, South Korea is a leading manufacturing nation and a key player in the global supply-chain, and exerts a true dominance in complex technological fields. Why was that evolution made possible?
The evolution of South Korea's industry into complex technological fields can be attributed to its strategic location in East Asia, which facilitated the exchange of technology and knowledge with neighboring countries, by both competition and collaboration.
Additionally, the government's support for Small-Medium-sized companies through investments in R&D, tax benefits, and supportive policies played a crucial role. Furthermore, South Korea's emphasis on education, particularly in STEM fields, has resulted in a highly skilled workforce capable of driving technological advancements.
By leveraging its advantageous location, government support, and well-trained workforce, South Korea has successfully transitioned from labor-intensive sectors to becoming a global leader in complex technological industries.
As an example, my entrepreneurial journey illustrates the impact of recognizing market gaps and introducing new technologies in South Korea. Prior to starting my own company, I identified the absence of dry vacuum pumps in the Korean market. This realization motivated me to establish my own venture after acquiring the pump business from the electronics division of a German company. By seizing the opportunity and leveraging my experience, I successfully introduced innovative pump products to the Korean market, contributing to the advancement of the country's technological landscape.
As the South Korean industry continues to grow into a key global player in critical fields, such as electronic materials and advanced machinery, critics claim that the country’s SMEs might find themselves ‘sandwiched’ between new and established manufacturing powers. What is your analysis of the opportunity and challenges that Korean SMEs face today?
Government support plays a vital role in the opportunities and challenges faced by Korean SMEs today. It extends beyond the industry's current relevance, considering the incubation process and future potential of the sector.
This comprehensive approach acts as a catalyst for industrial prosperity, offering benefits like tax incentives, research and development support, and fostering collaboration between academia, government departments, and research centers. The allocation of government research funds to corporate support is commendable, creating a balanced ecosystem that enables SMEs to seize opportunities and become hidden champions.
Our company takes pride in actively contributing to this transformative journey by leveraging the supportive policies and participating in the growth of Korean SMEs.
Over the last few years, the South Korean industry has lived through a series of supply-chain disruptions, including shortages caused by the COVID-19 pandemic and Japan’s unfamous restrictions on export of semiconductor materials and equipment in 2019. As a result, the Korean government and industry made the creation of an independent and resilient supply chain a national priority. How successful has Korea been in creating a domestic supply chain?
Korea has achieved success in advancing its domestic supply chain, leveraging its geopolitical advantages and strong relationships with countries like Japan, Taiwan, China, and the United States. While historically reliant on importing materials, parts, and equipments from Japan, efforts were made to foster development within Korean small and medium-sized companies.
Political tensions between Japan and Korea prompted a strategic shift towards sustainable self-sufficiency, despite the initial quality gap. Korean firms demonstrated patience and gradually incorporated domestically-produced items, reducing supplier risk and fostering technological advancements.
While there is still room for improvement in the technological sectors, our company has successfully secured a segment of the market share once held by Japanese firms, benefiting from reduced supply risks and the ability to participate in previously exclusive processes.
How do you foresee the evolution of the South Korean industry over the next 5 years?
We are proactively adapting to changing dynamics and bolstering our resilience as an integral part of our operational mindset. Rather than being deterred by challenges like component shortages from Japan, we have embraced them as opportunities for growth. By harnessing these experiences, we have fortified our capabilities and consolidated our manufacturing ecosystem.
Recognizing the importance of self-reliance and resilience, Korea is actively working towards establishing a robust and independent supply chain. We are fully aware of the necessity to transform our vulnerabilities into strengths, and we remain steadfast in our commitment to be self-reliant and resilient in the face of a dynamic global marketplace. Through our ongoing endeavors, we are positioning ourselves for success, driving the evolution of the South Korean industry and ensuring a prosperous future.
To counter the severe chip shortages that occurred during the Covid-19 pandemic, major foundries such as TSMC and Intel expedited investments in mega-projects. As a company heavily reliant on foundry investments, how are you navigating these circumstances and what strategies are you implementing to take advantage of this surge in chip production?
As a manufacturer of vacuum pumps for the semiconductor industry, LOT VACUUM is well-positioned to benefit from the surge in chip production. Increased semiconductor demand directly translates into a higher need for our vacuum pumps.
We are expanding our product lines to meet specific semiconductor process requirements and aiming to expand our market presence globally.
Additionally, we have capitalized on the growing demand for green energy, particularly in the solar power industry and secondary batteries.
By monitoring market trends, investing in R&D, and driving technological advancements, we are committed to sustaining our growth and success in this thriving industry.
Can you run us through your history and some of the main milestones you have achieved?
We embarked our journey in 2002 with the acquisition of a dry vacuum pump business unit from the esteemed German company, Leybold Vacuum. Through our participation in the government's "Growth Engine Program" in 2003, we successfully localized dry vacuum pumps, introducing our own model, the HD Pump. This milestone, coupled with our role as a trusted supplier to Samsung Electronics, contributed to our steady growth. In 2005, we attained listing on the KOSDAQ market, just four years after our beginnings.
In 2007, we extended our reach globally by reverse-exporting our technology, signing a contract with a reputable German vacuum pump manufacturer for vacuum pumps used in solar power applications. To further enhance our business capabilities, we established a consolidated office in Osan, Gyeonggi-do in 2019, enabling us to focus our efforts and continue our growth trajectory.
With a commitment to ESG management, the company has achieved steady growth with an annual average of 20% and aims to become a global leader in vacuum technology. Focusing on technological innovation and talent development, LOT VACUUM aims to seize opportunities in emerging industries like next-generation transportation and green energy.
Could you elaborate on the key competitive advantages of your company?
Elaborating on the key competitive advantages, I would highlight LOT VACUUM's focus on speed and responsiveness. Despite being relatively young compared to competitors founded a century ago, we achieved significant milestones within a short timeframe, developing our own model in just two years and listing on the KOSDAQ market within four years of establishment.
Our close proximity to customers allows for swift response and on-site repairs, earning a reputation for exceptional customer service. Collaborations with industry leaders like Samsung Electronics and SK Hynix in the semiconductor industry enable us to develop customized facilities that align with customer technological advancements.
Additionally, we leverage proprietary screw technology, enabling us to handle by-products from harsh processes, particularly through specialized units like the Plasma Pre-treatment System (PPS) at our subsidiary, LOT CES.
Looking ahead, we remain committed to innovation, focusing on energy-saving technology, improved corrosion resistance in extreme temperatures, enhanced power outage response, and the development of integrated controlled pumps with peripherals.
Driven by the need for miniaturization, the variety of processes and materials used to manufacture semiconductors as the industry moves to complex 3D and 4D integration poses unique vacuum and abatement challenges. For example, in the front-end process the use of new deposition techniques, such as Atomic Layer Deposition (ALD), causes condensation and corrosion within vacuum equipment, lowering productivity and increasing energy and maintenance costs. How are these technological developments impacting your R&D activities?
The ALD process exemplifies the ongoing changes in semiconductor manufacturing. As chip sizes shrink and integration increases, the process becomes more time-consuming, energy-intensive, and generates more harmful by-products.
However, the world is moving towards sustainable development. As a manufacturer, we recognize the need to reduce energy consumption and build smaller, eco-friendly facilities and equipment to align with this global trend.
This conflict between requirements presents a challenge, but I believe it also offers us new opportunities for innovation. We are determined to overcome this challenge and position to become a new leader in the industry.
To tackle these challenges, we are actively exploring strategies such as reducing the pump size, enhancing energy efficiency, and researching unique materials that minimize environmental impact.
I acknowledge that this is not solely our assignment, but a challenge faced by everyone in the industry. Collaboration and collective efforts are crucial to addressing these issues effectively.
To conclude, where do you foresee growth for your company in the future?
This summarize the entire interview. I would say, our business operations follow a two-pronged approach.
Our approach begins by recognizing the fundamental role of vacuum technologies across various industries, driven by the increasing demand for clean manufacturing environments. Our focus extends beyond semiconductors, encompassing promising opportunities in clean energy sectors like solar power and nuclear fusion, as well as next-generation transportation including secondary batteries and HyperTubes. Despite larger companies dominating projects like NEOM City, we are actively preparing for future opportunities through continuous technological development. Our strategic expansions in domestic and overseas markets position us for significant advancements in vacuum technology, with our plans for Austin enhancing our growth potential in the thriving North American market.
The second aspect of our approach involves incorporating vacuum pumps as integral components of semiconductor equipment, recognizing their crucial role in the industry. We view the vacuum pump as an essential component within the semiconductor ecosystem, enabling us to specialize in related industries. To facilitate this expansion, we have recently acquired a company that aligns with our vision. This strategic move will broaden our business reach and enhance our capabilities, allowing us to serve our customers more effectively.
I want to emphasize that the demands and requests from our customers are consistently complex and challenging, especially when they involve arduous processes under harsh conditions. These conditions require the use of robust vacuum pumps to handle stronger chemicals and maintain a clean environment. However, it is essential to prioritize eco-friendliness, as our customers value environmentally conscious solutions. Therefore, we are actively developing smaller, energy-efficient pumps to address these challenges effectively.
Our ability to meet these demands will be instrumental in shaping the future success of our company.
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