Showa Denko started its Project 2020+ medium-term management plan in December 2015, and their specialty gas business for semiconductors, identified as a growth-acceleration area in that plan, continues to perform well, The Gas Review reported.
Results for Showa Denko’s 2017 fiscal year show that sales of specialty gases reached YEN 35 billion, and a 15% higher target of YEN 40 billion has been set for 2018.
General Manager Masamichi Yagishita reflects on the two years since he became Corporate Officer and the General Manager of the Electronic Chemicals Division in January 2016, “User trends were somewhat flat immediately after I assumed my current post, but demand in semiconductors and displays started to pick up from the fourth quarter of 2016. Then 2017 saw user operating rates remained at a high level, and shipments continued to be strong for specialty gases as well as for Solfine high-purity solvents, abatement devices, and other products.”
According to Yagishita, of the specialty gases, sales of etching gases were particularly strong, driven by increased production of 3D memory devices. Showa Denko supplies more than 20 different types of specialty gases and more than half of them are used for etching. Showa Denko has reinforced production of specialty gases since the start of Project 2020+, with capital investments focused on these etching gases.
The capital investments are listed in the accompanying table, and recently include establishing SK Showa Denko, a joint venture with SK Materials in February 2017. SK Showa Denko built a new monofluoromethane (CH3F) plant (20 tonnes per year) in SK Materials pant in Yeongju, Korea, and started operation in March 2018. In Japan, the Showa Denko mother plant in Kawasaki is increasing its production capacity for hydrogen bromide (HBr) by 50% to 900 tonnes annually.
When asked about upcoming capital investments, Yagishita didn’t mention any specific gases, but explained, “We are determining the order of priorities and are strengthening production of etching gases for 3D memory devices, for which demand is currently increasing rapidly. We intend to negotiate with SK Materials to expand the items produced SK Showa Denko. We will continue to study candidate sites for investment including local production for local consumption overseas.”
Stronger sales network with new branch in Wuhan, China
Showa Denko is also strengthening their sales system at the same time as their production system. Recently, establishing offshore centres has been particularly noticeable. In the last half of 2017, they established a local subsidiary named Showa Chemicals of America to handle sales of speciality gases in the USA, and operation has already begun. In March 2018, they set up a branch office in Wuhan for Shanghai Showa Chemicals, their subsidiary in China. This branch office has been licensed for high-pressure gas facilities and has already started operation as a gas centre to store and ship specialty gas containers.
As for why Wuhan was selected as the site for the branch office, Yagishita said, “Shenzhen China Star Optoelectronics Technology Co., Ltd (CSOT), BOE Technology Group (BOE) and other display manufacturers are moving into this area. We were servicing these users with long-distance shipments from Shanghai, but establishing a branch office has enabled us to serve them faster.”
Also, in addition to display manufacturers, the demand for gases for semiconductors is expected to increase rapidly in Wuhan, in part due to the massive memory device plant under construction there by Yangtze Memory Technologies (YMTC). This new centre is therefore also a forward-looking investment into the future.
Targeting overall business growth with better overseas sales of abatement devices
Yagishita points to the two strengths of Showa Denko in their sales platform, which extends from R&D to product sales and after-service, and in the breadth of their product line, which covers 20 specialty gases, solvents, and abatement devices.
“Both of these strengths must be improved to achieve further business expansion. We have striven to enhance business according to previous policies, but we now want to strengthen global sales of Solfine solvents, abatement devices, and other products. Particularly for abatement device business in China, customer service dictates that products are handled mainly in the limited area around Shanghai, but we want to set up services centres, build partnerships with other companies, and consider all other possibilities to expand our handling region.”
Yagishita talked of his enthusiasm for specialty gases as well. “Difficulties in procuring fluorine materials are cause for concern due to the resulting higher prices, and we, too, are being forced to increase prices for some gases, but nevertheless, the demand for etching gases for semiconductors continues to grow. On the other hand, users are introducing new production processes, which constantly changes the types and qualities of gases that are required. We will continue to maximise our strengths in marketing, R&D, and other areas to respond quickly to our users.”
The Gas Review, issue no. 451