We are a major supplier of materials and solutions for the semiconductor and display industries. We have a portfolio of materials, systems and services as well as R&D and a global production network close to our customers. We have built our portfolio to cater to the continued digitalization and the unabated growth of data. The demand for increasingly sophisticated semiconductor chips and displays will continue to rise, not least thanks to developments such as Artificial Intelligence (AI), 5G (fifth-generation mobile networks) and autonomous driving. In recent years, we have developed into a relevant player in the global electronic materials market. In addition, we offer decorative and functional solutions for surfaces of all kinds.
In 2021, we started our “Level Up” growth program and are continuing to invest significantly more than € 3 billion in innovation and capacity expansion. Despite difficult market conditions in 2023, we plan to continue our “Level Up” growth program and will adjust the timeframe of our investments in line with market demand.
The Electronics business sector consists of three business units: Semiconductor Solutions, Display Solutions and Surface Solutions. Three cross-functional boards support the business units: Technology Leadership Board, Supply Chain Leadership Board, and Commercial Leadership Board. They define cross-sector standards, steer portfolio management, drive forward the exchange on good practice, and promote transparency.
Electronics accounted for 18% of Group sales in 2023, and its share of EBITDA pre (excluding Corporate and Other) was 15%. In 2023, Asia-Pacific generated 67% of Electronics’ net sales, Europe and North America accounted for 30% of sales.
Semiconductor Solutions
Semiconductor Solutions is the largest business unit in terms of sales within Electronics. It comprises our product and service offering for the semiconductor industry. We are developing materials and solutions to make the next generation of devices – we help make chips smaller, faster, more powerful and more sustainable.
Semiconductor Solutions supplies products for major production steps in wafer processing, including doping, patterning, deposition, planarization, etching, and cleaning. It also supplies delivery equipment for semiconductor manufacturing. Specialty cleans, photoresists, and conductive pastes for semiconductor packaging complement the portfolio. Intermolecular is our center for complex material solutions in Electronics, located in San Jose, California, USA. There, we explore, test, and develop combinations of different materials for next-generation electronics.
Our Semiconductor Solutions business unit consists of the following business fields: Formulations, Thin Films, Specialty Gases and Delivery Systems & Services.
- The Formulations business field comprises the Patterning and Planarization production steps. This includes lithography products for surface treatment such as photoresists and the associated auxiliaries, anti-reflective coatings and materials for directed self-assembly (DSA). The Planarization business comprises CMP materials (chemical-mechanical planarization).
- The Thin Films business field supplies solutions and productions for our customers in the fields of dielectrics (organosilanes and spin-on dielectrics) and metallics product offerings. Many of our materials are used for leading edge nodes, which is the enabler of advanced chips for generative AI.
- The Specialty Gases business field provides high-purity gases for semiconductor manufacturing. These gases are crucial for precise deposition, doping, etching, and cleaning during wafer fabrication. With a strong commitment to meeting the semiconductor industry’s stringent requirements, our Specialty Gases business supports the industry in the development of advanced electronic devices.
- The Delivery Systems & Services (DS&S) business field, with its systems business, develops and installs reliable delivery equipment to ensure the safe and responsible handling of specialty chemicals and gases for semiconductor manufacturing. At many sites of the industry, production facilities and delivery systems are operated and maintained by our MEGASYS® Total Gas and Chemical Services employees.
In 2023, the semiconductor market was impacted by a cyclical downturn, mainly due to advance spending on consumer electronics (PCs, smartphones, game consoles) in previous years due to the Covid-19 pandemic. The situation was amplified by inflation and high interest rates during the fiscal year. These developments prompted consumers to postpone purchases of electronic devices.
Semiconductor manufacturers continue to invest at a high level. This is also evidenced by the strong growth of our equipment business (part of DS&S) in 2023 despite the currently weak semiconductor market. In view of the expected long-term increase in demand, we continue to expand global production capacity for our specialty gas, liquid chemical and slurry delivery systems.
In fiscal 2023, we integrated the chemical business of Mecaro Co. Ltd., which we acquired in 2022, into our Semiconductor Solutions business. We also strengthened our business in thin films technology and our footprint in Korea. In February 2023, we broke ground for a new integrated facility in Kaohsiung, Taiwan. Here we will produce a comprehensive portfolio of semiconductor materials in one single site.
In April 2023, we announced our plans to expand manufacturing capacities at our site in Hometown, Pennsylvania, USA, thus increasing domestic production capacity for electronics components. The roughly € 300 million investment in the Hometown site is intended to further develop our largest integrated specialty gases facility. In June 2023, we commissioned a new production facility for DS&S in Chandler, Arizona, USA.
Display Solutions
Our Display Solutions business unit includes the businesses with liquid crystals (LC), display patterning materials (materials for surface treatment), organic light-emitting diodes (OLED), photoresists, reactive mesogens, smart antenna (LC-based antennas), and liquid crystal glazing (LC-based windows). We support our customers in developing novel display technologies for TV, IT, mobile devices, automotive, gaming, and other applications. Together with our customers we are working in the field of AR/VR to expand the application scenarios of LC & OLED materials and enhance the user experience in small and micro-sized displays. We are working very closely with leading panel makers to develop next-generation products with LCD (liquid crystal display) technology for the electronics market.
While lockdowns and working from home pulled forward demand for TVs and IT devices during the Covid-19 pandemic, this trend has meanwhile reversed. The industry saw a significant reduction in demand during 2023, resulting in a decline in customer factory utilization.
The Covid-19 pandemic has accelerated the shift of the liquid crystals industry towards China and increased competition. In 2023, we maintained our position as manufacturer of innovative LC materials with our XtraBright™ products, winning new projects for large-area displays as well as high-resolution mobile devices. Our OLED and photoresist materials are used in multiple free-form display products. In addition, we are actively working with customers on both LC-on-silicon (LCoS) and OLED-on-silicon solutions for AR/VR displays.
With our OLED materials, we are also supporting our customers in making sustainable OLED structures, which are important for new OLED applications such as IT screens. In 2023, we developed deuterated materials for next-generation OLED displays. They have the potential to more than double the lifetime of OLED stacks without compromising on efficiency and voltage, enabling displays with higher brightness.
Real estate investors use our product eyrise® s350 solar shading (sun protection at the touch of a button) to deliver on ESG (environment, social, governance) objectives. For example, a large real estate investor in Switzerland has already installed eyrise® on all facades of its flagship project in the center of Zurich. More commercial projects are currently in installation.
Surface Solutions
In our Surface Solutions business, we provide our customers with solutions that help them to create functional and decorative surfaces of all kinds. We focus on markets for automotive coatings, cosmetics, and, to a smaller extent, industrial applications. With our portfolio of active ingredients, we enable cosmetics manufacturers to enrich their skin care products with moisturizing, protecting and anti-aging effects. Moreover, our functional solutions serve many innovative applications, from dirt-repellent and easy-care surfaces to laser markings of plastic parts and cables.
Despite the current challenging economic environment, Surface Solutions is continuing to implement its strategic transformation. We continued to invest in digitalizing and modernizing our production plants around the globe while adjusting our capacities to the changing demands in our different markets.