OCI Co. Secures Major Contract with SK Hynix Inc.

OCI Co. Becomes Primary Supplier of High-Purity Phosphoric Acid to South Korean Semiconductor Industry

OCI Co., a South Korean fine chemical company, has recently secured a groundbreaking contract with SK Hynix Inc., a prominent global semiconductor manufacturer. This pivotal agreement marks a significant milestone, positioning OCI as the primary supplier of high-purity phosphoric acid—a critical material in chip production—for all major semiconductor producers in South Korea. This development is noteworthy as it is the first time a South Korean company has taken on such a crucial role in the domestic semiconductor supply chain.

Establishing Dominance in the High-Purity Phosphoric Acid Market

The selection of OCI as SK Hynix's primary domestic supplier follows rigorous quality testing and the successful delivery of an initial batch of high-purity phosphoric acid, essential for the semiconductor wafer etching process. This material is vital in producing advanced semiconductors, and OCI’s ability to meet stringent quality standards underscores its growing prominence in this specialized market.

Beyond SK Hynix, OCI's contract positions the company as a key supplier to other major South Korean semiconductor manufacturers, including Samsung Electronics Co., SK Keyfoundry Inc., and DB HiTek Co. This expanded role not only cements OCI's status as a leading producer of ultrapure phosphoric acid in Korea but also significantly boosts its influence in the broader semiconductor material manufacturing sector.

Expanding Production Capabilities

Since entering the phosphoric acid industry in 2007, OCI has steadily increased its production capacity, which currently stands at 25,000 tons annually. The company has ambitious plans for further expansion to meet the rising demand from the semiconductor industry. This strategic move is part of OCI's broader effort to solidify its position as a key player in the high-purity chemical market, which is increasingly critical for semiconductor manufacturing.

OCI’s Chief Executive, Kim Yoo-shin, has emphasized the company's shift toward the chip material business as a strategic response to the escalating demand within the semiconductor sector. By ramping up production of high-purity phosphoric acid, OCI aims to better serve semiconductor manufacturers and enhance its competitive edge in this high-stakes market.

Strategic Acquisition to Bolster Capabilities

In a related strategic move, OCI’s Board of Directors has approved the acquisition of P&O Chemical, a joint venture with POSCO Future M. This acquisition, involving a 51% stake purchase from POSCO Future M for KRW 53.7 billion, is expected to further enhance OCI's capabilities in producing high-purity materials. P&O Chemical, established in July 2020, operates a hydrogen peroxide plant with an annual capacity of 50,000 metric tons, supplying high-purity electronic-grade hydrogen peroxide crucial for semiconductor manufacturing.

Implications for South Korea's Semiconductor Industry

OCI's recent contract with SK Hynix is seen as a major milestone, not only for the company but also for South Korea's semiconductor industry as a whole. By becoming the sole domestic supplier of high-purity phosphoric acid to all major semiconductor manufacturers in the country, OCI is playing a critical role in localizing the supply of essential materials. This localization is crucial for strengthening South Korea's self-reliance in semiconductor production, reducing dependence on foreign suppliers, and enhancing the resilience of the domestic semiconductor ecosystem.

The broader semiconductor industry in South Korea stands to benefit from OCI's increased production capacity. Analysts predict that this move will likely encourage other suppliers to ramp up their capabilities, further bolstering the country's semiconductor supply chain. As global demand for semiconductors continues to surge, driven by advancements in AI and high-performance computing, OCI’s expanded production and market presence are expected to support the industry's growth and meet the escalating demand for high-purity materials.

Conclusion

OCI Co.'s strategic advancements, including its landmark contract with SK Hynix and the acquisition of P&O Chemical, represent significant strides in strengthening South Korea's semiconductor supply chain. By enhancing its production capabilities and securing its role as a critical supplier, OCI is well-positioned to meet the growing demands of the semiconductor industry, contributing to the resilience and self-sufficiency of the domestic market. This development underscores the importance of localizing critical materials in the semiconductor supply chain, a trend that is likely to continue as global demand for advanced technologies accelerates.

Key Takeaways

OCI becomes the primary South Korean supplier of high-purity phosphoric acid to SK Hynix.
OCI now serves as the supplier of high-purity phosphoric acid to all major South Korean semiconductor producers.
OCI seeks to ramp up production capacity to 25,000 tons annually to accommodate industry demand.
OCI's expansion into the semiconductor materials sector aims to fortify its competitive position.
OCI's acquisition of a majority stake in P&O Chemical aims to diversify its high-value material manufacturing.

Did You Know?

High-Purity Phosphoric Acid in Semiconductor Production:
- High-purity phosphoric acid plays a critical role in the semiconductor industry, particularly in the etching process of silicon wafers, essential for creating semiconductor devices. The acid's purity is crucial for ensuring the quality and reliability of the final products, as impurities can lead to chip defects.
Semiconductor Wafer Etching Processes:
- Etching is a crucial semiconductor manufacturing step where specific patterns are created on silicon wafers using chemicals. High-purity phosphoric acid is utilized in wet etching processes to selectively remove material from the wafer surface, defining the microscopic features of semiconductor devices.
OCI's Strategic Expansion in the Semiconductor Materials Sector:
- OCI's decision to enhance its high-purity phosphoric acid production and its acquisition of a majority stake in P&O Chemical aligns with its strategy to strengthen its position in the semiconductor materials market. Through increased production capabilities and diversified product offerings, OCI aims to meet the escalating demand from semiconductor manufacturers and elevate its competitive edge. This expansion underscores OCI's commitment to supporting the domestic semiconductor industry and reducing reliance on foreign suppliers for crucial materials.