Kiturami Boiler bets on chip, battery facility systems

Choi Jin-min, founder and chairman of Kiturami Boiler Co., is one of the few living witnesses in South Korea's boiler history. At the age of 21, he supplied the then-modern, briquette-fired boiler system to the country's first apartment in Mapo, Seoul in 1962.

Marking its 60th anniversary, Kiturami, which means cricket in Korean, established itself as a leader in the fields of heating and cooling systems not only for homes but also for industrial facilities.

Following the series of its acquisitions in the 2000s, the boilermaker has the country's top three refrigeration and air conditioning companies -- Century Corp., Shinsung Engineering Co. and Kiturami-Bumyang Air Conditioning Co. -- under its wing.

Now Kiturami is set to take a new step as a key contractor for the clean rooms used in the semiconductor manufacturing process for Samsung Electronics Co. and SK Hynix Inc., as well as for the rechargeable battery dry rooms of LG Energy Solutions Ltd. and SK On Co. 

"This year, soaring raw material prices may put a dent in our profits, but our sales will sharply increase at home and abroad," Choi told The Korea Economic Daily on March 28. 

The company is pivoting on refrigeration and air conditioning systems, semiconductor clean rooms and electric vehicle (EV) battery dry rooms, which Choi believes will push its annual sales to 3 trillion won ($2.5 billion) within five years.

For its bread and butter business of boilers, Kiturami will target the US market.

Among its three key units, Shinsung Engineering is expected to report hefty revenue growth this year as a cooling system provider for the dry rooms of a joint EV battery plant of Samsung SDI Co. and SK On Co. to be built in Hungary; LG Energy Solution Ltd.'s plant in Poland; and Samsung SDI and SK Nexilis Co.'s joint facility in Malaysia.

Shinsung is also the country's top cooling system provider for clean rooms that remove particulate contaminants from semiconductor wafer surfaces. 

TWO CRISES, FIRE

Since its establishment in 1962, the company had undergone two crises that pushed it to the brink of shutdown. The 1970s oil shock interrupted sales of its oil-fired boilers and Choi had to dispose of the entirety of his assets -- three white telephones and a company car -- to pay his employees.  

"At the time, I was broke and thought of applying for a US visa as an engineer," he said in an interview with this newspaper

Its second crisis came in 1988. Its unionized workers occupied its plant for six months and went on strike to cease production during the period.

Going through those hard times, the self-made businessman made up his mind to stop borrowing. Since 1990, Kituram has stuck to debt-free management and funded its string of acquisitions and plant construction with cash on hand.

On the first day of this year, however, another hardship awaited him. A big fire caused by a short circuit burned down two buildings at its production complex in Asan, South Chungcheong Province, and incurred 60 billion won in damage. 

"I thought it was an opportunity from God and upgraded our facilities to a smart factory equipped with state-of-the-art laser welding machine," he said. The production lines in Asan, 86 kilometers south of Seoul, were restored to normal three months after the fire.

BUSINESS BREAKDOWN, NUCLEAR ENERGY

Refrigerating and air conditioning systems made up the bulk of Kiturami's 2021 revenue with 41%. Heating systems, including boilers, accounted fo 32% of its revenue of 1.4 trillion won last year.

Century, under the company, is the country's No. 1 player in the field of heating, ventilating and air-conditioning (HVAC) systems for nuclear power plants, submarines and other special ships and overseas plants. Notably it commands 70% of the refrigeration and air conditioning systems market for special ships in South Korea.

Down the road, Century's HVAC business for nuclear power plants is expected to gain new steam from the incoming government's pro-nuclear energy policy. In the past few years, its nuclear power business posted virtually zero revenue at home, hit by the current government's nuclear phase-out policy.

"We've had to bite the bullet over the past five years," Choi said.

Its other unit Kiturami-Bumyang Air Conditioning Co. takes the top position in the area of cooling towers. It supplies heat removing devices to Samsung Electronics and SK Hynix.

Back in 1995, the chairman co-led the establishment of the National Academy of Engineering of Korea as a founding member to award talented engineers with the Korean version of the Nobel Prize. 

He has earned the nickname "Daddy Long Legs" as an intended secret donor of 7 billion won to the institute. As an engineer, Choi holds 650 patents on boiler-related technologies.

Write to Dae-Kyu Ahn at powerzanic@hankyung.com
Yeonhee Kim edited this article.