Can a Paper Company Make Big Profits When Semiconductors Are Thriving? [Biz Leader]

Hanchang Paper, Korea's Only Dedicated Premium White Paperboard Facility
CEO Junyoung Kim: "New Business Challenge in MLCC Manufacturing Materials"
Aiming to Replace Japanese Imports in the KRW 100 Billion Domestic Market

Panoramic view of Hanjung Paper’s Yangsan Plant.

"Hanchang Paper is not just a simple manufacturer of white paperboard. Based on our advanced material technology accumulated over many years, we are evolving into a specialty materials company. We will secure new growth drivers rooted in stable profitability, and become a company recognized in the market for differentiated competitiveness."

Junyoung Kim, CEO of Hanchang Paper, shared the company's future growth strategy in a recent interview with The Asia Business Daily. He explained that, while strengthening the competitiveness of the existing premium paperboard business, the company also plans to expand into high-value material fields such as carrier tape base paper for MLCCs (Multi-Layer Ceramic Capacitors), thereby laying the foundation for sustainable growth.

Founded in 1973, Hanchang Paper is a paper manufacturer specializing in white paperboard. In addition to general white paperboard, it has established competitiveness in the premium paperboard sector, which is used in packaging for cosmetics, pharmaceuticals, and electronic products. In particular, the company has maintained a partnership with Korea's leading home appliance and electronics company for about 13 years, supplying packaging materials used in a variety of product lines, including smartphones, tablets, smartwatches, and Galaxy Buds.

Hanchang Paper holds a significant share of the white paperboard supply market for the leading domestic home appliance and electronics company. Unlike standard white paperboard, packaging for electronic products requires precise quality management, as even subtle differences can affect product competitiveness. Therefore, stable production capacity and quality control capabilities are essential.

Leveraging its existing business competitiveness, Hanchang Paper is also accelerating its expansion into new business areas. A representative example is the carrier tape base paper business used in the MLCC manufacturing process. Carrier tape base paper is an industrial material used to stably transport ultra-small electronic components, such as MLCCs, during manufacturing processes.

CEO Kim explained, "The domestic market for carrier tape base paper is estimated at about 100 billion won, while the global market is between 500 billion and 600 billion won. Currently, most high-quality products are dependent on Japanese companies, making localization an urgent need."

The main customers at present are Korea's largest electronic components affiliate and the world's No. 1 MLCC company. MLCCs are essential components used in a wide range of industries, including electric vehicles, robots, energy storage systems (ESS), and AI servers, so the market is expected to see significant growth.

Kim stated, "The MLCC market itself is expected to continue growing, and carrier tape base paper has high technological entry barriers and limited competition. We decided to enter this business as we believe it offers both growth potential and profitability."

Hanchang Paper is pursuing entry into this market based on its existing premium paperboard production technology. Unlike standard industrial paper, carrier tape base paper requires a high level of precision. It must meet stringent criteria for thickness, profile, density, fiber content, and suitability.

Kim explained, "From a manufacturing perspective, there are similarities between carrier tape base paper and Hanchang Paper's premium paperboard. We have experience producing premium paperboard using 100% virgin pulp and possess three-layer forming equipment, which provides a strong foundation for development."

Currently, Hanchang Paper is producing prototypes using its own facilities and working on quality improvements. The company is coordinating quality standards with intermediate processors and conducting various tests in collaboration with external organizations.

The foundation for Hanchang Paper's venture into new businesses lies in its solid competitiveness in existing operations. While the paper industry enjoyed a boom during the COVID-19 period due to increased delivery and related consumption, it later faced difficulties from expanded supply, weakened demand, and rising raw material prices. Hanchang Paper was also affected by the industry downturn, but is now seeing positive effects from improved market conditions and enhanced internal competitiveness.

Kim said, "In recent years, the paper industry has experienced a challenging period due to increased supply and weakened global demand. However, from this year, export prices have recovered, and since the second half of last year, both prices and volumes have shown improvement."

In particular, Hanchang Paper has established a differentiated production system by producing general and premium white paperboard on separate dedicated lines. Hanchang Paper is the only company in Korea operating dedicated facilities for premium white paperboard, which is why it holds a 50% market share in the domestic premium white paperboard segment. Premium white paperboard also boasts significantly higher margins than standard white paperboard.

Kim stated, "We are confident that this year we will achieve a definite turnaround into profitability. In the first quarter, we recorded operating profit of about 1.6 billion won, and performance since the second quarter has also been favorable." He added, "In the past, Hanchang Paper has posted operating profit of between 15 billion and 17 billion won. With our new facilities now stabilized and our competitiveness in the premium paperboard business maintained, I believe we are capable of generating even higher profits than before."

He further commented, "Hanchang Paper is not just an ordinary white paperboard company. We supply products to demanding clients such as Korea's leading home appliance and electronics company and major domestic consumer goods companies, and we are also competitive in high-value markets like cosmetics and pharmaceuticals."

He continued, "Our goal is not simply to increase production volume, but to secure stable profitability through products that generate high added value. We will grow based on a differentiated business portfolio, including premium paperboard, MLCC materials, and eco-friendly alternative materials."

This content was produced with the assistance of AI translation services.