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Finding Answers in Materials with Premium Smartphone Markets Slowing
Parts Makers
Finding Answers in Materials with Premium Smartphone Markets Slowing
  • By matthew
  • August 19, 2013, 06:48
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The Seowon Intech SWU-3120 USB modem is designed to be small and compact for laptop users so that it can provide seamles broadband wireless service on the move.
The Seowon Intech SWU-3120 USB modem is designed to be small and compact for laptop users so that it can provide seamles broadband wireless service on the move.

 

Parts makers struck by the stagnation in the premium mobile phone markets are overcoming this crisis by expanding their materials business.

Mobile phone materials receive less pressure to lower prices and have a higher barrier to entry in the short term, leading to stable profits. More parts makers are expected to diversify their portfolio through investing in the materials business.

According to industry reports released on August 15, major parts makers such as KH Vatec, Optrontec, Seowon Intech, and Woojeon & Handan have successfully created new engines for growth by developing materials for mobile phones.

KH Vatec, a key partner for Nokia, has strengthened its portfolio and diversified its customer base through expansion into the materials business. In 2Q 2013, KH Vatec’s revenue was at 329.4 billion won (US$296.5 million), more than double the revenue at 1Q 2013. This was due to the doubling of revenue from magnesium materials, which are used to reduce the weight of mobile phones. Recently, it successfully commercialized aluminum materials. Aluminum is effective in dissipating heat, and is expected to be applied to more smart devices in the future.

Optrontec is also flourishing with the blue filter materials business. A blue filter is a key material for camera modules with specifications above 8 megapixels. High-pixel CMOS image sensors have small pixel size and large light absorption, leading to optical distortion. A blue filter is a material that corrects the distortion in the lens. With increases in blue filter sales, Optrontec had record high sales in 2Q 2013. Optrontec is partnered with seven of the top ten mobile phone makers, including Samsung Electronics, so the blue filter business is expected to grow further in the future.

From the feature phone era to the current era of smart devices, Seowon Intech has sustained its No. 1 position in the Korean subsidiary materials industry. The industry has a limited number of competitors, which means that as long as it retains competitiveness in back-end processing, it could achieve appropriate levels of profit. Seowon Intech has aggressively pursued the mobile phone market by adding high-value products with waterproof features to its original line of subsidiary materials.

Woojeon & Handan, a company that mainly manufactures mobile phone cases and digital set-top boxes, has found a new engine for growth through developing new materials technology. Woojeon & Handan recently developed a new material that could waterproof mobile phones using double injection technology. It plans to secure glass composite fiber production technology and develop an ultra-light, high-strength material. Initially, Woojeon & Handan acquired the molding and design technology for its parts business. But now, the materials business has become more profitable for them.

“The number of mobile phone models is gradually increasing, but all products use the same materials. Securing key technology and finding niche material markets can reduce the risks in the parts business,” said industry personnel.