Korea’s Mobase to build US plant as it wins $733 mn Hyundai deal

SUWON, Gyeonggi Province -- Mobase Electronics Co., a South Korean automotive electronics parts maker, is planning to establish a plant in the US as it won a 1 billion ($733.1 million) component supply deal from Hyundai Motor Group, the world’s No. 3 automaker.

Mobase Electronics said it signed a contract to provide the South Korean conglomerate’s two carmakers – Hyundai Motor Co. and Kia Corp. – with body domain controllers, which manage smart keys, tire pressure monitoring systems, rear occupant alerts, ultrasonic intrusion protection and other services to both companies for six years from 2026.

“We are currently selling parts to the US states of Georgia and Alabama through a factory in Mexico,” said Son Byeong-Jun, chairman and co-CEO of Mobase Co., which acquired Mobase Electronics, in an interview with The Korea Economic Daily on May 17. “We are considering building a plant in the US in the next two or three years.”

Hyundai Motor Co. is operating plants in Montgomery, Alabama and building another one for electric vehicles and batteries in Bryan County, Georgia with an aim to launch commercial operations in the first half of 2025. Its smaller affiliate Kia has a factory in West Point, Georgia.

Mobase Electronics’ shares on Tuesday ended up 7.9% at 2,155 won, far outperforming a 0.1% dip in the wider Kosdaq, following news of the supply deal. The stocks have surged up 22.4% to 2,445 won, the highest since September 2023.

FOCUSES ON EFFICIENCY AFTER TAKEOVER

Mobase, a smartphone case maker, has been improving Mobase Electronics’ efficiency since taking over the auto parts maker in 2019. Mobase holds a 45.84% stake in Mobase Electronics as of the end of the first quarter.

“We have completed the tasks for the company’s efficiency by 90%,” said Son, who has been focusing on improving Mobase Electronics’ financial structure and turnaround.

Mobase Electronics turned to the black in 2021 with an operating profit of 8.6 billion won on a separate basis from a loss of 7.5 billion won in 2020. The company reported profits of 23.2 billion won and 18.1 billion won in 2022 and 2023, respectively.

Its production yield, the metric that measures the probability of getting good products from manufacturing processes, nearly doubled to 90% from less than 50% when it was acquired.

BETTER EARNINGS

Mobase Electronics is expected to improve earnings from next year, Son said.

“Mobase Electronics is a company capable of developing customized technology,” he said.

“We are in the final stage of establishing a computer system to properly manage more than 30,000 products of Mobase Electronics. Once we apply the inventory management system this year, earnings will improve further in the next.”

The company last year developed faster wireless EV charging technology.

“It took about eight hours to charge a Genesis with the existing 11kW rate,” he said, referring to Hyundai’s standalone premium brand. “But it needs only three to four hours to charge the 22kW technology we developed.”

Son aims to repay all debts of Mobase Electronics in the medium to long term.

“It is a target to remove all of Mobase Electronics’ borrowings from banks in three years,” he said. “We plan to pay dividends from next year as a listed company needs to return profit to investors.”

Write to Mi-Kyoung Lee and Ji-Hye Min at capital@hankyung.com
 
Jongwoo Cheon edited this article.