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Koh Young Technology Inc Electrical Equipment

Koh Young revolutionized electronic product manufacturing inspection with the introduction of 3D technology. The company leads the global solder paste inspection (SPI) market since 2006 and pioneers the expansion of 3D automated optical inspection (AOI) industry. Based on its expertise in 3D measurement, Koh Young is strengthening smart factory transformation solutions and diversifying into surgical robotics sector.​

Published: Sep 21, 2020 (Gmt+09:00)

Last updated: Jan 13, 2022 (Gmt+09:00)

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The First Mover that Pioneered 3D Precision Measurement Equipment Industry

‘With our own technical expertise, we could create a market that didn’t exist before’

In 2002, at the age of 45, Korean robotics engineer Koh Kwang-ill made a life-changing decision. Koh, now CEO of Koh Young Technology, was then working at Mirae Corporation, a promising company in the fast-growing semiconductor equipment sector when he decided to launch his own company. His motivation? Koh dreamed of “identifying a need and being able to research and create that product right away.”

Koh started his company without a specific product in mind. Instead, his first step was exploration – more than six months of countless visits to Korean electronics companies’ production sites and facilities. Koh felt such on-site probe would allow him to discover new areas of demand that even the customers themselves had not thought of.

And so the story began of this global B2B champion, boasting market capitalization of 1.3 trillion won and counting virtually all major global electronics companies as its customers. Koh Young’s tale of growth, recently expanding into smart factory solutions and the surgical robotics sectors after proving itself as a provider of inspection equipment for the electronic product manufacturing process, started with the full confidence of Koh and his young colleagues who believed that with their own technological expertise, they could “create a market that didn’t exist before.”


  • [Products & Value Proposition] Cost Reduction by Pinpointing Only ‘True Defects’
    During their over six months of field visits to production and manufacturing sites, Koh and the other company founders queried hundreds of engineers about the most pressing issues concerning the electronic product manufacturing process.

    The engineers’ biggest concerns were surrounding product defects. Where exactly did the defects come from? Koh discovered that the defects typically had to do with solder paste, a type of adhesive used when mounting the electronic components onto the printed circuit board (PCB). Specifically, if there isn’t enough solder, the electronic components do not adhere well. But if too much solder is applied, the components will adhere too much, creating a short circuit. Koh figured that 70% of PCB defects occurred early in the process, during the solder printing stage of production.

    The issue was that it was extremely difficult to inspect every single PCB, produced at amounts ranging from several hundred to tens of thousands per day. Thus, typical industry practice was to inspect a selected number of random samples with 2D microscopes. There was another issue with the microscopes: 3D inspection was limited and it was especially infeasible to inspect every single object due to slow speed.

    Koh judged that his company could secure these electronics companies as customers if he could come up with 3D optical inspection equipment that could automatically determine if the solder had been properly printed onto the PCB.

    Koh’s colleagues were initially skeptical. But Koh saw it from a different angle. The fact that the market was dominated by 2D was, to Koh, the “exact reason why we must do it.”

    After more than a year and too many all-nighters, in 2003 Koh Young Technology finally succeeded in developing 3D solder paste inspection (SPI) equipment. And customer reaction to Koh Young’s breakthrough was explosive.

    How 3D Inspection Equipment Is Used in the Electronic Product Manufacturing Process

    “The process of producing a PCB by mounting electronic components such as semiconductor chips onto the board is called Surface Mount Technology (SMT). The SMT process has three stages. First, the solder is printed onto the PCB. Second, the electronic components are mounted to the board. Third, there is a reflow oven process during which the board is heated,” said Koh. “How much the cost can be reduced is determined by the stage at which the defects are identified. If the engineers can identify the defects prior to the mounting stage, they can just clean the board. However, if the defects are identified after mounting the chips, the expensive chips must be taken off and are thus destroyed.”

    Customers benefiting from cost reductions using Koh Young’s SPI equipment asked Koh to also develop 3D inspection machinery for the two stages after solder printing. They requested a system that could first determine whether the components are properly placed onto the solder before they are put into the oven (Pre-AOI stage), and second, determine whether the components are firmly fixed onto the circular board after coming out of the oven. Koh Young met its customer demands by developing in 2010, for the first time in the world, the 3D Automated Optical Inspection (AOI) system that identifies defects in these two later stages.

    One customer in Germany conducted an experiment directly comparing Koh Young’s 3D AOI system to typical 2D inspection equipment. The customer inspected 1,000 PCBs with both inspecting systems and compared the results. The 2D equipment concluded that 247 PCBs out of 1,000 were defective, while Koh Young’s 3D equipment identified 23 PCBs as defective. The engineers at the German company then checked the PCBs  identified as defective with microscopes to confirm the accuracy. They found that only 18 of the 247 PCBs deemed faulty by the 2D equipment were truly defective, while 20 of the 23 PCBs that Koh Young’s 3D AOI equipment judged faulty actually were. The customer was impressed. Koh said “such results reveal how many non-defective products are being categorized as defective,” adding, “the cost-reduction implication of minimizing such ‘false defects’ is tremendous.”
  • [Market Position] Dominating 3D Inspection Equipment Industry with Majority Market Share
    Koh Young had essentially invented a new market by developing the world’s first 3D inspection equipment and is fully enjoying its first-mover advantage. According to the market research firm Market Insights Reports, the size of the 2019 global SPI industry, including both 2D and 3D, is estimated at 189.1 million US dollars (approx. 220 billion won). Koh Young holds 52% share of the market.

    The AOI market is valued at 312.1 million US dollars, of which Koh Young has 30% share. The remaining 70% is taken by 2D equipment manufacturers. Koh Young is still the only company in the world that produces 3D AOI equipment. Koh Young expects that its share in the AOI market will reach the level it enjoys in the SPI market, with customers gradually replacing their current AOI equipment with 3D machines.

    Koh Young's share in relevant markets

    Koh Young’s revenue growth has been relatively slow recently due to US-China trade disputes and impact from the COVID-19 outbreak. Its revenue decreased to 222.1 billion won in 2019, 6.7% lower than the year before. But the company projects that figure will surpass 300 billion won when the global economy rebounds and if the company’s AOI market share reaches its current level of SPI market share.
  • [Growth Potential] Entering Brain Surgery Robotics Market with 1 Trillion Won Revenue Target
    Koh Young Technology’s 2019 revenue marked 222.1 billion won, with SMT equipment contributing the largest proportion.

    The company is now looking into the surgical robotics segment to fuel its 1 trillion won revenue goal by 2025. While surgical robots seem unconnected to manufacturing inspection equipment, they actually share the same basics. The core technology used in surgical robots roots from the 3D optical and robotics technologies that Koh Young has accumulated in previous years.

    The recent push for surgical robotics is part of what the company calls its “Beyond the Core” strategy, expanding into other markets where its core technology can be used to further its business opportunities.

    Koh Young developed its first surgical robot KYMERO in 2011 as part of a Korean government-funded project assigned by the Ministry of Trade, Industry and Energy (MOTIE). In 2016, The company also received approval from the Ministry of Food and Drug Safety (MFDS) to produce and sell KYMERO in Korea.

    After conducting years of clinical tests in Korea, the company eventually signed a contract with Yonsei University’s Severance Hospital in June 2020 to supply KYMERO for surgical uses.

    In adopting KYMERO, Severance Hospital’s neurosurgeon Dr. Jang Jin-woo said that brain surgeries in Korea will now become more time-efficient with a greater degree of precision.

    Installed at the hospital in October 2020, KYMERO and a team of doctors led by Professor Jang Won-seok have successfully completed Korea’s first ever robotic surgery on epilepsy in April this year.

    Severance Hospital said that its doctors used KYMERO to insert electrodes into the brain of a 10-year-old patient with epilepsy, and removed the damaged part of the brain accordingly.  

    KYMERO’s success also allowed Koh Young to sign a sales contract with another major hospital in Korea, Samsung Medical Center, in July 2021. Samsung Medical Center last year had conducted clinical trials of KYMERO and reported the final results in June 2020.

    Samsung Medical Center’s neurosurgeon Dr. Lee Jung-il, who led the clinical tests, gave a nod to KYMERO’s accuracy and time efficiency: “I carried out 25 brain surgeries with KYMERO as part of its clinical trials, in all of which KYMERO pointed to the exact lesion.”

    Dr. Lee added that “robots used in neurosurgery should deliver far more precise and sensitive technologies than those used for other purposes. It is remarkable that Koh Young has successfully developed the medical robot for brain surgery despite stringent regulations in the medical field.”

    Figure 1. KYMERO

    KYMERO marks the world’s first commercialization of a brain surgery robot and can be attached to the patient’s bed.  

    Koh Young’s impetus to enter the surgical robotics market did not come from inside. Rather, it was a number of medical doctors who came to Koh in 2011. These doctors were in charge of a national project assigned by MOTIE to develop surgical robots. They asked Koh Young to join the national project, saying, “Koh Young is the only company in Korea that can make surgical robots.”

    At first, Koh politely declined the offer. He replied that his company had “no interest in industry segments where our company is not fully confident we can lead the market.” But with the doctors persistently requesting reconsideration, Koh and his colleagues initiated a deep-dive analysis into the surgical robotics market.

    Their thorough research culminated in pinpointing a specific medical segment that needs Koh Young’s 3D optical technology and robotics technology: surgical robots for brain diseases. The national project that the doctors had requested Koh to join aimed for local development and production of different types of surgical robots for various operations, such as cranial nerve surgery or laparoscopic surgery. Koh stipulated that his company “would only join the project if we are promised we can focus solely on surgical robots for brain diseases.”

    Figure 2. Leksell frame

    Operating on functional brain diseases such as epilepsy and Parkinson’s disease require sub-millimeter levels of accuracy. With brain tissue consisting of micro-vessels and neurons, brain surgeries demand absolute precision to avert or minimize possible risks, including brain damage. This is why brain surgery is performed by only a handful of highly skilled medical doctors. Naturally, most brain surgeries have hitherto navigated and measured the exact target coordinates of the surgery by attaching the Leksell frame (Figure 2) to the head of the patients.

    Figure 3. KYMERO in detail

    Koh Young’s surgical robot KYMERO (Figure 3) consists of two parts. The navigation platform shows the part of the brain where the surgery will be conducted as well as the surgery route; while the automatic stereotactic system has a robotic arm that indicates the target coordinates of the surgery. When the brain image from a CT scan or MRI is sent to the navigation platform, it determines the optimal part of the brain for surgery and its best route. Simultaneously, on the operating table, a scanner navigates the patient’s head and calculates the precise coordinates of the surgery. According to the calculated coordinates, robotic arms attached to the operating table indicate the exact area where the surgery will be performed.

    Koh Young plans to request US FDA approval for KYMERO with the purpose of entering the US market in 2023.

    According to the market research firm WinterGreen Research, the global industry for surgical robots is forecast to grow from $4.2 billion (5.14 trillion won) in 2016 to $13.0 billion (15.9 trillion won) in 2022. Of this, the market size for brain surgery robots is estimated at 3 trillion won. Based on these figures, Koh Young Technology expects to secure multiple hundreds of billion of won worth of brain surgery robotics deals.

    Global investment firms are increasing holdings in the company with positive views on Koh Young's potential. As of the end-2021, Baillie Gifford, Allianz Global Investors and First Sentier Investors respectively hold 8%, 8.2% and 5.1% stakes in Koh Young. Wellington Management and Robo Global's Robo Global Robotics & Automation Index ETF own 4% and nearly 3%, respectively.
  • [Competitive Advantage] Raising Market Entry Barriers with Smart Factory Solutions
    While Koh Young Technology is already a market pioneer, the company is continually working to outdo the competition. With the aim of widening the gap with its competitors and expanding revenue streams, Koh Young has been developing smart factory solutions for the SMT process over the past six years. The solutions not only help  customers identify defective products, but also assist in optimizing the manufacturing process to minimize relevant costs.

    Koh stated that “our inspection equipment enables the creation of smart factories primarily because the products are measured in 3D.” He added, “The existing sampling inspection method with the naked eye was merely to ‘inspect’ the products, while 3D AOI can ‘measure’ them. If the location, volume, and the shape of the printed solder are ‘measured’ and the measurement values are accumulated, they create a set of data. The data are then analyzed by an AI algorithm, thereby making automatic corrections to the process where there are issues and thus minimizing the number of product defects.”

    If more customers adopt Koh Young’s smart factory solutions, its revenue model will shift from an equipment sales-oriented one to a license fee-focused model. The amount of equipment sold will also increase as Koh Young’s smart factory solutions become more prevalent, as these solutions require the customers to use Koh Young’s equipment. In short, the development of smart factory solutions creates a customer lock-in effect.

    Koh commented, “Our success in smart factory solutions means it will be more difficult for competitors to challenge our market leadership.” If we successfully transform our revenue model to a smart factory-oriented one, the revenue created by the SMT sector will double.”
  • [Valuation] Manufacturing → Robotics → Healthcare
    In fewer than 20 years since its inception, Koh Young Technology has grown rapidly to reach market capitalization of 1.3 trillion won. The company’s 2019 revenue reached 222.1 billion won, posting 33.3 billion won and 29.5 billion won in operating profit and net income, respectively.

    Koh Young shares trade around 50 times the EPS. Although its growth is not as extreme as before, its PER is evidence that the market sees its growth potential as a robotics company. The average PER of the robotics companies included in the industry-representative ETF, the ROBO Global Robotics & Automation Index (Table 1), is around 40. Japanese competitor Omron, which produces 2D inspection equipment, and Taiwan’s TRI (Test Research Inc.) have lower PERs at 39 and 14, respectively as of September 3, 2020.

    Some companies among Koh Young’s peer group have much higher PERs. Japanese automation sensors company Keyence Corporation maintains its PER at around 60. In other words, looking at its peer group, Koh Young has further upside corporate valuation potential.

    When surgical robots take up a higher portion of Koh Young’s total revenue, the company is also likely to receive more attention from the market as a healthcare company. The average PER of the healthcare companies included in the ROBO Global Healthcare Technology & Innovation ETF is around 50.
  • [Corporate Culture] Research, Data and Market Driven
    Koh Young listed on the Kosdaq in June 2008 but was immediately hit by the global financial crisis. Its revenues fell sharply by 21% from 34.3 billion won in 2008 to 26.9 billion won in 2009. Layoff concerns were rife among the employees.

    But to everyone’s surprise, Koh moved in an unexpected direction. He gathered all the senior executives together and announced, “Now we are going to invest more. As there is no need to increase production volume, we should invest more on R&D.” Koh held a separate meeting with the company’s research engineers, giving them free reign: “Feel free to do as much research as you want. You must have been very busy with your normal daily work. Now is the time to spend more time on what you’d like to do.”

    The employees followed his words. They began to focus their endeavors on research projects that had been left undone or on research areas of their own interest.

    The global economy gradually started to pick up again in 2010. Koh Young’s revenues surged to 73.0 billion won in 2010, more than 2.7 times the 2009 figure. The timely investment made during the financial crisis propelled Koh Young to the top spot in the  3D inspection and measurement equipment sector.

    Koh Young had never considered any layoffs whatsoever – even with the recent US-China trade disputes and COVID-19 outbreak. Koh’s philosophy is simple yet resonating: “Everyone needs creativity to create something original rather than a copy. This thing called creativity actually comes from good relationships. And that level of creativity directly depends on how much you trust your people and if you create a playground that is big enough.”

    Koh Young maintains an annual R&D investment level at more than 10% of revenue. The portion last year was 13.6%. Such heavy focus on R&D turned out to be extremely fruitful with 509 patents as of March 2020, 259 in Korea, and another 259 overseas.

    The company was investing in the AI sector as early as 2010, with global AI research centers in San Diego and Vancouver. Koh Young also established a Smart Electronics Manufacturing Laboratory (SEM Lab) at the State University of New York at Binghamton. There are total 30 engineers at global AI research centers and another 20 engineers at the SEM Lab.

    Global Network

    Another key feature of Koh Young Technology’s corporate culture is that it is highly field-oriented. Koh emphasizes the importance of the field experience, based on lessons he learned prior to establishing his own venture. With a bachelor’s degree in engineering from Korea’s top university, Seoul National University, Koh has worked at the Electronics and Communications Research Institute (ETRI), Goldstar Co. (now LG Electronics), LG Electric (now LS Electric), and Mirae Corporation. When Koh was young, his vision was to help Korea beat Japan in the robotics sector. To realize his goal, he went to the US and received his PhD from the University of Pittsburgh.

    But Koh, even with his doctorate degree, faced fierce challenges on his way to his childhood dream. The biggest obstacle was the internal bureaucracy of the large conglomerates at the time. Even just for one project, Koh had to meet and persuade many different internal stakeholders. When he was busy working on how to persuade the shareholders, more agile competitors were launching new products in the market. This led to Koh’s bold decision to start his own venture in 2002 – with an R&D focus and a field-oriented approach as his guiding business principles.

    As a result, Koh Young’s top management makes key decisions based on the data collected from the manufacturing and production fields. Koh Young shares all reports drafted at customers’ manufacturing facilities with the internal decision makers.   

    Koh stressed, “It is really difficult for our competition to mimic us, because we deploy relevant personnel real-time and even provide technical support when there is a new component introduced in the field or if there is a complaint filed by a customer.” Koh Young spends 8 billion won on international business trips annually for customer relationship management purposes.
  • [Corporate Governance] Global Asset Management Firms Among Main Shareholders
    Koh Young’s largest shareholder is Koh Young Holdings with 20% share. The Koh Young Holdings share is 93.77%-owned by Koh and the rest by his wife. Koh Young’s other main shareholders include global asset management firms that invest long term. Specifically, the list includes Allianz Global Investors (5.09%), Columbia Management Investment Advisors (3.28%), Swedbank of Sweden (2.97%) and RBC Global Asset Management (2.86%). The National Pension Service of Korea also owns around a 3% share.

    Koh Young is a company that executes IR events to actively reflect opinions put forward by minority shareholders. The company had held total 637 IR sessions last year. The shareholders urged the company to expand its efforts toward the CSR and Environment, Social and Governance (ESG) sectors. To address such concerns, Koh Young has recently conducted a consulting project on ESG and has shared report of the result in September.

    In December 2021, Koh Young earned the highest AA rating from Sustinvest, Korea’s environment, social and governance (ESG) assessment institute. The company received a score of 91.1 out of 100 in the second half of 2021, earning the highest rating in two consecutive years. It has set up the ESG committee under the board of directors to strengthen the related activities and started issuing annual ESG reports in 2020.

By Nak-Hoon Kim and Gayung Chu; edited by Daniel Cho (