Barun Electronics: Hidden Champion in the Global Memory Market
SEOUL, KOREA – Barun Electronics may not be a household name; nevertheless, if these products - smart phone, digital camera, navigation system or car black box – form part of your daily activities, it may ring a bell or two. Ranked 6th in the global memory card market, this Korean-based OEM company produces one hundred million semiconductor-related products such as flash memory cards and USB flash drives each year, supplying to various global memory manufacturers based in the U.S. as well as Japanese auto giants.
Competitiveness of Barun Electronics
What are the driving forces behind this unnoticed, yet highly successfully company? An outstanding stacking technology - piling semiconductor chips in eight layers - led Barun Electronics to yield 99%, the highest on record, exceeding the industry average of 70%. Its impressive high yield rate does not only represent technical competence and safety assurance, but also cost competitiveness. “In the semiconductor industry, if problems occur while piling layers, say, you made a mistake on the sixth layers, you should throw all of them away and start all over again. The more problems encountered, naturally, the higher the price will be as they will be included in the production cost,” explained Se-jong Lim, CEO of Barun Electronics. On top of this technical competitiveness, the company makes sure it’s always ahead of its distribution schedule. “While it takes other rival companies 10 to 14 days on average for their distribution cycle, it only takes us six short days. Promptness and reliability made us receive “Excellent Partner” awards from our clients last year.” Barun Electronics, with its exceptional corporate values and culture, now stands at a very competitive stance over rival companies.
“Some say we benefited from the halo effect on Korean domination in the semiconductor market. It may be so; however, we do not even have competitors in Korea. This back-end market is rather a niche market where both large and small companies can hardly invest in. Large companies would lose cost competitiveness because of high wages and administration costs to run the plants. SMEs, on the other hand, would find it very costly to acquire dozens of equipment each costing over USD 1.5 million. Barun Electronics, as a mid-sized firm, rightly jumped right into the market,” Mr. Lim said.
Company Expansion through gaining a foothold in China
With the increasing number smart phone and tablet users and the rising demand for mass storage devices, the production supply of Barun Electronics is expected to grow rapidly. As its main client, this year, requested to double the quantity, the company is now pressured to build another factory to meet the overflowing demand. Despite the recession in the Korean manufacturing sector - factories operating at 30 to 40 percent capacity on average - Barun Electronics’ plant cannot meet its upsurging orders even at full capacity. The company is now engaged in a feasibility study on building additional plants in China. A meeting with several Chinese companies is set next week to further discuss this issue. Operating plants in China will reduce cost by 30% as compared to cost required in Korea, strengthening the company’s cost competitiveness. “Having confidence in our technology, we are now considering the exchange of capital and technology, a business model I believe can be very advantageous for both parties. As we enter the Chinese market, we are also aiming to be listed on Shanghai Stock Exchange and Shenzhen Stock Exchange.” Gaining a foothold in China, the company is now attempting to diversify its global market from its main client in the U.S. to Asia, Middle East as well as Europe.
Barun’s CSR: Giving back through Employment
Besides its exclusive position in the flash memory market, Barun Electronics is known for its corporate social responsibility. This year, the company hired 31 vocational high school graduates from different provinces. Holding the record for the world’s highest rate in college entrance with 79%, academic inflation has been a social issue in the Korean society. Competition for employment is harsh, even for college graduates and much worse for high school graduates from areas outside Seoul, the capital city. Students who have to seek jobs right after high school are more likely those who are in financial distress. In this context, hiring them can be considered a social contribution. From the company’s perspective, hiring 31 young people at once was not an easy decision even for a large company but stood firm on his belief. “An upright society entails equal opportunities for everyone. I believe enterprises should take the lead in building a fair community. We selected excellent students by recommendation from 13 school principals and plan to train them step by step to become future plant managers and administrators,” he added.
“This year, they are scheduled to supply memory cards to LG Electronics which is due to unveil the world’s first-ever seven-inch tablet for kids containing hundreds of contents on education, movies, languages and pictures for entertainment purposes. Barun Electronics is now classified as a large company with over 400 employees and USD 180 million in sales. However, we won’t stop moving forward and will continue to diversify our products, clients and markets, to reach our target sales of USD 220 million this year.”