SFA Engineering finds fortune in EV battery defects
ASAN, South Chungcheong — Nestled in an industrial complex in Asan, South Chungcheong, six factories operated by SFA Engineering produce testing and transportation equipment for virtually every high-tech component you can imagine — from displays and semiconductors to electric vehicle batteries.
The equipment maker started off as a part of now-defunct Samsung Aerospace and split off from the company in 1998 to form SFA Engineering.
Kosdaq-listed SFA is about 10 percent owned by Samsung Display.
SFA’s mainstay business used to be deposition and laser equipment for organic light emitting diode (OLED) panels, but its focus is now extended toward EV batteries and semiconductors to capitalize on the booming sectors and reduce reliance on a single business.
Its testing equipment is supplied to Korea’s major EV battery makers, although the supplier declined to name its clients. The three largest battery manufacturers are LG Energy Solutions, SK On and Samsung SDI.
“Our new growth engines will be chip and rechargeable battery equipment while maintaining a dominant position in the display and glass equipment markets,” said SFA Engineering CEO and President Kim Young-min during a press conference on Wednesday that followed a press tour of the production site.
“Of the two, the EV battery industry, in particular, is enjoying a rapid growth in demand, and the battery makers are making trillions of won in investment,” the CEO said, “The semiconductor industry is booming, too, but there is higher entry of barrier as chipmakers tend to stick with their existing suppliers and take a very conservative stance towards a change in equipment vendors.”
Given that defects in batteries can lead to an explosion, battery makers are pressured to put their finished products through rigorous inspection to detect defective batteries.
SFA Engineering has introduced two types of performance testing tools — one for the surface of the batteries using data analysis and the other internal using a CT scan.
The former utilizes automated optical inspection equipment, and SFA believes that its strength lies in high accuracy and fast speed.
“It only takes four seconds to have a battery cell tested, while other equipment takes around seven minutes,” explained SFA's Jang Gyu-young.
“We are developing a new version of automated optical inspection to achieve shorter testing time of three seconds to get an upper hand over other suppliers,” Jang said.
The quick pace allows each cell to be tested, while with slower machines, battery makers resort to representative sampling for testing.
The automated optical inspection is 95 percent accurate, according to the company.
The company won 50 billion won ($40 million) of orders last year from that product alone, according to Lee Hae-won, general manager in the strategic development team at SFA Engineering.
Its CT inspection machine also significantly reduced the testing time in enhancing efficiency.
“The three dimensional X-ray scanning can be done in 24 seconds, while competing products would take around three and five minutes,” said Jin Myung-chul, a team leader at SFA.
Display equipment accounted for 80 percent of company orders in 2016, but was 29 percent last year.
EV battery machines generated 28 percent of sales last year, and semiconductor equipment 18 percent. Logistics equipment used by retailers was 12 percent.
CEO Kim noted that entry into the new sectors spared the company from potential losses in sales since display industry investment is growing slower than expected.
“Chinese panel makers were expected to make big investments into OLED with the markets predicting that 110 new OLED production lines could be built,” Kim said. “But the plan has been delayed as they have trouble meeting targeted yield rates.”
The company’s clients include Samsung Display, China’s BOE and CSOT.
It reported 148.3 billion won in net profit last year and 1.56 trillion won in sales.
BY PARK EUN-JEE [email@example.com]