Ukrainian neon gas maker shifts production to South Korea

According to South Korean news portal SE Daily and other South Korean media, Odessa-based Cryoin Engineering has become one of the founders of Cryoin Korea, a company that will produce noble and rare gases, citing JI Tech — The second partner in the joint venture. JI Tech owns 51 percent of the business.

Ham Seokheon, CEO of JI Tech, said: “The establishment of this joint venture will give JI Tech the opportunity to realize the local production of special gases required for semiconductor processing and expand new businesses.” Ultra-pure neon is mainly used in lithography equipment. Lasers, which are an essential part of the microchip manufacturing process.

The new company comes a day after Ukraine’s SBU security service accused Cryoin Engineering of collaborating with the Russian military industry — namely, supplying neon gas for tank laser sights and high-precision weapons.

NV Business explains who is behind the venture and why Koreans need to produce their own neon.

JI Tech is a Korean raw material manufacturer for the semiconductor industry. In November last year, the company’s shares were listed on the Korea Stock Exchange’s KOSDAQ index. In March, the price of JI Tech stock rose from 12,000 won ($9.05) to 20,000 won ($15,08). There was also a notable increase in mechanic bond volume, possibly related to new joint ventures.

Construction of the new facility, planned by Cryoin Engineering and JI Tech, is expected to begin this year and continue until mid-2024. Cryoin Korea will have a production base in South Korea capable of producing all types of rare gases used in semiconductor processes: xenon, neon and krypton. JI Tech plans to provide a special natural gas production technology through “a technology transfer transaction in a contract between the two companies.”

According to South Korean media reports, the Russia-Ukraine war prompted the establishment of the joint venture, which has reduced the supply of ultra-pure gas to South Korean semiconductor manufacturers, mainly Samsung Electronics and SK Hynix. Notably, in early 2023, Korean media reported that another Korean company, Daeheung CCU, would join the joint venture. The company is a subsidiary of petrochemical company Daeheung Industrial Co. In February 2022, Daeheung CCU announced the establishment of a carbon dioxide production plant in the Saemangeum Industrial Park. Carbon dioxide is an important component in ultra-pure inert gas production technology. In November last year, JI Tech became an investor in Daxing CCU.

If JI Tech’s plan is successful, the South Korean company could become a comprehensive supplier of raw materials for semiconductor manufacturing.

As it turns out, Ukraine remains one of the world’s largest suppliers of ultra-pure noble gases until February 2022, with three major manufacturers dominating the market: UMG Investments, Ingaz and Cryoin Engineering. UMG is part of the SCM group of oligarch Rinat Akhmetov and is mainly engaged in the production of gas mixtures based on the capacity of the metallurgical enterprise of the Metinvest group. The purification of these gases is handled by UMG partners.

Meanwhile, Ingaz is located in the occupied territory and the status of its equipment is unknown. The owner of the Mariupol plant was able to partially resume some production in another region of Ukraine. According to a 2022 survey by NV Business, the founder of Cryoin Engineering is the Russian scientist Vitaly Bondarenko. He maintained personal ownership of the Odesa factory for many years until ownership passed to his daughter Larisa. Following his tenure at Larisa, the company was acquired by the Cypriot company SG Special Gases Trading, ltd. Cryoin Engineering ceased operations at the start of the full-scale Russian invasion, but resumed work later.

On March 23, the SBU reported that it was searching the grounds of Cryoin’s Odessa factory. According to the SBU, its actual owners are Russian citizens who “officially resold the asset to a Cypriot company and hired a Ukrainian manager to supervise it.”

There is only one Ukrainian manufacturer in the field that fits this description – Cryoin Engineering.

NV Business sent a request for the Korean joint venture to Cryoin Engineering and the company’s senior manager, Larisa Bondarenko. However, NV Business did not hear back before publication. NV Business finds that in 2022, Turkey will become a major player in the trade of mixed gases and pure noble gases. Based on Turkish import and export statistics, NV Business was able to piece together that the Russian mixture was transshipped from Turkey to Ukraine. At the time, Larisa Bondarenko declined to comment on the Odessa-based company’s activities, although Ingaz’s owner, Serhii Vaksman, denied that Russian raw materials were used in gas production.

At the same time, Russia developed a program to develop the production and export of ultra-pure rare gases - a program under the direct control of Russian President Vladimir Putin.

Post time: Apr-14-2023