Shin Etsu Chemical : Business Activity (2.2 MB)

July 26, 2023 at 07:44 pm EDT

Business Activity

Leveraging our core technologies in four business fields to manufacture materials and products that underpin industries and livelihoods

Sources of	Business Activity	サステナビリティ	Value Created	Vision
	Sustainability
Our Competitiveness

Infrastructure	Electronics
Materials	Materials

Core Technologies

Functional	Processing
& Specialized
Materials
Services

Management Foundation

PVC is indispensable to our lives mainly in the areas	In addition to our world-leading share in silicon wafers,
of infrastructure, housing, and agriculture. As the	we provide various materials that are essential for
largest manufacturer of PVC, we provide a stable	semiconductor manufacturing. We contribute to the dig-
supply to customers around the world.	ital transformation and green transformation of industry.

Infrastructure	Electronics
Materials	Materials

Core Technologies

Single-crystal growing,

Organic synthesis, Powdering/Sintering,

Electrolysis, CVD & PVD,

Polymerization,

Plastic & Film processing

Functional	Processing &
Specialized
Materials
Services

Along with more than 5,000 different types of sili-	Meeting the diverse needs of customers by
cones that support people's lives and industries, we	leveraging the advanced technological capa-
provide a stable supply of high value-added prod-	bilities developed by the Shin-Etsu Group.
ucts. We also help alleviate environmental impacts
and food shortages.

ANNUAL REPORT 2023

Business Activity

Technologies, Materials and Products of the Shin-Etsu Group

Business Overview

The Shin-Etsu Group makes a wide array of products for use in a broad range of industrial fields by drawing on the production technologies accumulated in the process of continuously diversifying and improving its product offerings. By reciprocally maintaining close relationships, our business mix extends across many different fields and we have built a robust business structure impervious to economic conditions.

	Oxide single	Products	Cellulose
	crystals
	derivatives
	(Lithium
		Synthetic
Compound	tantalate)
semiconductors			pheromones
			Aroma

Infrastructure Materials

As for PVC, the signs of a global economic recession appeared in the market but bottomed out at the end of 2022. On the other hand, the caustic soda market remained firm but began to weaken after the turn of the year. Under these circumstances, we worked to achieve full production and full sales based on precise demand forecasts in the global market and to conduct detailed price negotiations reflecting market fluctuations.

Net Sales

(¥ billion)
1,500.0
			1,308.0
1,000.0		857.1

500.0	485.8
0
	3/2021	3/2022	3/2023

Operating Income

(¥ billion)
600.0		541.3

400.0
	317.7
200.0
99.6
0
3/2021	3/2022	3/2023

Semiconductor	Minor	Materials	Pulp	chemicals
silicon
metals

	Gallium		Acetylene		Low


Rare earths	Silane			Organic	dielectric
& Poly			materials
			acid
	silicon	Technologies
		derivatives


	Single-crystal		Organic	Silicones/	LED/
	growing		synthesis	Semiconductor
Rare earth		Epoxy
technology		technology	encapsulating
magnets
		materials


Rare				Silicon
			metal
earths

Silicon metal	Powdering/	The Shin-Etsu	Electrolysis		Silanes

Sintering	Phenol
Silica	Group	technology	derivatives
technology

Electronics Materials

The semiconductor market had entered an adjustment phase since the autumn of last year, and a similar situation remained at the end of the year, but the semiconductor materials as a whole were supported by the performance in the first half of the year. Rare earth magnets were also affected by the semiconductor shortages in customer production and the adjustments in data center investment, but the shipments to other markets made up for it.

Net Sales

(¥ billion)
900.0			875.6
		708.9
600.0	595.6
300.0
0
	3/2021	3/2022	3/2023

Operating Income

(¥ billion)
400.0
300.0			301.4
		244.7
200.0	206.0

100.0
0
	3/2021	3/2022	3/2023

LIB anode							Photoresists
						Industrial
material		CVD*1
		Polymerization		salt
		&
				technology
Boron		PVD*2
	Plastic & Film				Chlorides,
Pyrolytic					Fluorine
		processing			Caustic soda
boron nitride					compound
Silane		technology
(PBN)

						Silane	Liquid
Synthetic		Molybdenum
			Chlorine &		ﬂuoroelastomers
	Silicon
quartz/
	Fluorine		Vinyl	Ethylene
Quartz cloth		PVC/
	polymers	acetate
			Silicones

Photomask			Silicones

blanks			Polyvinyl

Pellicles	PVC/Silicones	Vinyl	chloride
(PVC) resin
	acetate
	processed

	resin
	goods

Functional Materials

In silicone products, although some product lines were affected by inventory adjustments and declining market prices in the second half of the fiscal year, we worked to maintain profitability by increasing the proportion of high-performance products such as automotive, personal care etc., and by promoting the development and launch of products with reduced environmental impact. Shipments of cellulose products, particularly high-value-added pharmaceuticals, were firm.

Net Sales

(¥ billion)
600.0
		493.3
400.0	395.6
314.2
200.0
0
3/2021	3/2022	3/2023

Operating Income

(¥ billion)
150.0
		130.6
100.0	94.7
70.7
50.0
0
3/2021	3/2022	3/2023

Business Segment

		Infrastructure Materials		Functional Materials

		Electronics Materials		Processing & Specialized Services

*1 Chemical vapor deposition (CVD)

A method for depositing thin film by chemical reaction on the substrate of precursors produced by applying energy such as heat, plasma, or light to raw material gases.

*2 Physical vapor deposition (PVD)

A method for adhering and depositing on the substrate surface by evaporating and scattering solid raw materials as atomic/molecular particles by heating, sputtering, ion beam irradiation, etc.

Processing & Specialized Services

The sales of semiconductor wafer-related containers were strong mainly for 300mm wafer use, and the sales of input devices for automobiles increased. The sales of PVC-related products such as PVC wrapping films for food packaging and construction materials increased due to the permeation of revised prices.

Net Sales

(¥ billion)
150.0
			131.6
	101.0	112.6
100.0
50.0
0
	3/2021	3/2022	3/2023

Operating Income

(¥ billion)
30.0
		26.3
20.0	20.9

16.3
10.0
0
3/2021	3/2022	3/2023

Shin-Etsu Chemical Co., Ltd.

ANNUAL REPORT 2023

Business Activity

Infrastructure Materials

PVC is indispensable to our lives mainly in the areas of infrastructure, housing, and agriculture. As the largest manufacturer of PVC, we provide a stable supply to customers around the world.

Infrastructure Materials

Major Products and Applications

PVC

PVC is extremely durable and easy to work with. It can also be easily recycled. For these reasons, it is used widely in items related to our daily existence. For example, PVC pipes in water supply and sewerage systems help extend the useful life of such infrastructure because they do not need to be replaced for at least 50 years.

PVC Pipes		PVC-Framed Windows		Plastic Greenhouses for Agriculture

Using Our Products to Solve Societal Issues (PVC)

Protecting the planet by reducing greenhouse gas emissions and expanding social infrastructure to cope with population growth

Salt accounts for roughly 60% of the raw materials used to make PVC and is a commodity that still exists in abundance throughout the world. As the production of PVC does not rely heavily on petroleum resources, it makes effective use of the planet's limited resources. As such, CO2 emissions during the PVC production process are lower than other plastics.
The main applications of PVC are pipes and construction materials. Products made with PVC help conserve resources because they have a longer service life compared to other plastic products (PVC pipes last around 50 years*).
PVC-framedwindows boast superior thermal insulation and therefore help lower energy consumption and curb CO2 emissions.
PVC construction materials are much lighter than materials made from steel, for example, which leads to reductions in the amount of fuel required to transport them and move them into place during construction.
In Japan, the material recycling rate for PVC is about 33%*, higher than that for other types of plastic.

Caustic Soda

Caustic soda is a base chemical produced from the electrolysis of salt and is indispensable to various industries for the purpose of alumina extraction, as a raw material in lithium-ion batteries and super-absorbent polymers, and for water treatment.

Alumina

Cathode Materials for Lithium-Ion Batteries

Polyvinyl Alcohol

(POVAL)

Polyvinyl alcohol (POVAL) has many applications, including adhesives, various types of film, textile treating agents, interlayers of laminated glass, and pharmaceutical additives.

Car Windshields

*Source: Ministry of Land, Infrastructure, Transport and Tourism, Vinyl Environmental Council

Topic
Shintech: Augmenting PVC production capacity	Approximately

Competitive Advantages (PVC)

Efficient production with the world's largest production capacity
Stable quality and stable supply to customers
Favorable raw material situation and stable energy procurement in the U.S.
Integrated production system starting from raw materials (ethylene)
Three global bases, and production at multiple sites in three locations in the U.S.
Global sales network

Integrated production system starting from raw materials (Shintech)

In-House production External procurement

	Ethylene	Vinyl chloride
	monomers
Natural
	PVC
gas
	Vinyl chloride
	Ethylene
	monomers

	Chlorine
Salt		Worldwide Sales
	Caustic soda

Shintech, one of the Group's subsidiaries in the

Shintech PVC production capacity

35x

3.62 millions of tons

U.S. and the world's largest manufacturer of PVC,

(Millions of tons)

(plan)

boosted its annual production capacity to 3.24

3.24 millions of tons

million tons by bringing online a new plant with an

annual production capacity of 290,000 tons at the

2.95 millions of tons

end of 2021 to meet brisk demand in mainly North

Largest production

America and emerging countries. Construction is

capacity in the world

underway on a PVC plant expansion that will have

an annual production capacity of 380,000 tons

Largest production

after completion, thereby increasing Shintech's

capacity in the U.S.

total production capacity to 3.62 million tons.

Start of operation:

In order to stably supply PVC to customers

100,000 tons

worldwide, in 2020 the company established an

integrated production system starting from raw

materials, chiefly by producing in-house some of

1974

1978

1981

1984

19881990 19921994

1997 2000 2001

2008 2010

2015

2021 2023

the ethylene required for PVC manufacturing.

(FY)

Shin-Etsu Chemical Co., Ltd.

ANNUAL REPORT 2023

Business Activity

Electronics Materials

Shin-Etsu Group Products Associated with the Overall Semiconductor Manufacturing Process

Electronics Materials

In addition to our world-leading share in silicon wafers, we provide various materials that are essential for semiconductor manufacturing. We contribute to the digital transformation and green transformation of industry.

Using Our Products to Solve Societal Issues

Development of AI, 5G, automated driving, IoT

To achieve fully automated driving and telemedicine, 5G-compatible communication devices and infrastructure are necessary, and many high-performance,energy-efficient semiconductors are used in these devices. Silicon wafers, the substrate material for semiconductors, and various other semiconductor materials provided by the Shin-Etsu Group not only help to enhance performance and reduce the size and weight of electronic devices, but also contribute to improving electric power conservation and efficiency, thereby supporting the expansion and continuous growth of semiconductors on multiple fronts.

Providing technologies and materials essential for carbon neutrality

Rare earth magnets, which have about 10 times more magnetic force than conventional ferrite magnets, help enhance motor

Semiconductor manufacturing process

Processes where our products are used

Raw materials

Polysilicon is produced from silicon metal (Si), made by removing the oxygen from quartzite (SiO2), as the base material.

Single crystal silicon

Single crystal silicon is produced in a cylindrical format by melting polysilicon.

Cutting and polishing

Single crystal silicon is cut into thin slices and polished to a mirror finish.

Silicon wafers

The processes shown above are used to create silicon wafers.

Wafers are shipped to device manufacturers

CVD, Oxidation

Wafers are put into a high-temperature furnace to produce a thin oxidation film on their surface.

Products supplied by the Shin-Etsu Group

Silicon metal

Quartz crucibles

Silicon carbide fine-ground powder

Silicon wafers

Wafer cases

efficiency and power consumption, contributing to improved energy efficiency and reduced greenhouse gas emissions.

Competitive Advantages

Pattern formation

Special photosensitive materials (photoresists) are applied, circuit patterns are baked in and developed, and the surface is processed. ->P38

Dicing

Individual wafers are cut away and made into integrated circuit chips.

Assembly

Using wire, the chips are connected electrically to a circuit board.

Resin sealing

Quartz glass for use in the semiconductor manufacturing process

Synthetic quartz photomask substrates

Photomask blanks

Rare earths

(yttrium oxide)

Photoresist

Pellicles (dust protection covers for photomask substrates)

Overall business

Semiconductor-related

products

Rare earth magnets

Stable quality and stable supply to customers
Responding to increasingly sophisticated technological requirements
Synergies gained from an extensive lineup of semiconductor-related products (competitive edge in development and proposal capabilities)
Stable supply supported by operating multiple production bases and an established integrated production system starting from raw materials
Development of products that substantially reduce the use of heavy rare earth materials and promotion of recycling

The chip is coated in resin to protect it from heat and shocks.

Semiconductor devices

The completed semiconductor device is now embedded in the final product.

Final product

Encapsulant materials

Liquid encapsulation materials

Thermal interface materials

Shin-Etsu Chemical Co., Ltd.

ANNUAL REPORT 2023

Business Activity

Major Products and Applications

Silicon Wafers

Silicon wafers are the substrate material for semiconductors and are used in all kinds of devices, from smartphones, home appli- ances, automobiles and other devices that we see in our daily lives, to cutting-edge fields such as AI and IoT. Shin-Etsu Group's silicon wafers, including our quality control and evaluation analy- sis, have earned high praise from customers around the world, along with our high-precision single crystal technologies, high-end processing technologies, and high-quality epitaxial growth technologies for advanced logic and imaging devices.

Electronics Materials

Rare Earth Magnets

Rare earth magnets are used in products such as automobile motors, power generators, industrial robots, compressor motors for air conditioners, motors for hard disk drives utilized in data centers and other facilities and wind power generator motors. We are engaged in the manufacture of these magnets from the separation and refinement of rare earths as raw materials to the magnet product. Furthermore, it is reliably supplying high-quality rare earth magnets

with advanced features by means of the development	Electric vehicle	Data center

of its own grain boundary diffusion method, which
reduces the amount of heavy rare earth used, while
maintaining high performance.

Rare Earths

Encapsulant Materials for Semiconductor Devices

Photoresists

A circuit pattern is formed by applying photoresists to the surface of a silicon wafer and then passing light through a photomask to expose the surface in that pattern. In addition

Semiconductor lithography

process (pattern formation) Products oered by

the Group

Light source	Photomask
Blanks

Known as the "vitamins of the high-tech industry," rare earth elements are used in a variety of applications depending on their individual characteristics. They are used in the light-emitting devices installed in diagnostic imaging systems such as CT scanners and contribute to improved testing safety at medical sites.

These materials are notable for their superior heat and crack resistance and are used in general semiconductors, automotive power modules and devices for home appliances. Furthermore, the encapsulant materials we have developed for large- scale packaging improve the rate at which materials are effectively utilized, contribut-

ing to the reduction of device manufacturing costs.

to photoresists for excimer lasers (KrF, ArF) and EUV, we also supply spin-onmiddle/under-layer hardmasks used in the nanofabrication process.

Photomask Blanks

Photomask blanks are the material that forms a thin metallic film on the surface of a synthetic quartz substrate and serve as patterning templates when drawing circuits on silicon wafers. In addition to providing

photomask blanks for use with krypton fluoride (KrF) and argon fluoride (ArF) lasers, we have established state-of-the- art photomask blank mass production technologies, including multilayer film structures and permeable membrane structures with excellent light resistance properties.

Photoresists

Light-shielding

ﬁlm

Synthetic quartz substrates

Pellicles	Electron beam

	lithography

Condenser lens

Development

Photoresists

	Etching
Silicon wafer	Remove
photoresist
	Photomask

LED Packaging Materials

These materials offer high transparency, heat resis- tance, and other excellent properties, and help prevent the degradation of LED brightness over a long period of time.

Topic
Strengthening the supply chain for rare earth magnets
in anticipation of further increase in demand	Separation and	Recycling of rare earth magnets

	refining	process
The goal of a carbon-neutral society has created strong demand			Rare earth oxides

for rare earth magnets, and further growth in the global market	Our plants		Rare earth metals
for rare earth magnets is expected due to the spread of electric
(Japan and Vietnam)

vehicles, the increase in renewable energy such as wind power

Synthetic Quartz

Synthetic quartz, the key material of optical fiber, provides superior light transmission. In an ordinary glass plate, light attenuates in about two meters. However, synthetic quartz allows light to reach a distance of about 100 km. The Group was the first in the world to mass produce synthetic quartz, which is higher in purity than natural quartz. Due to these attributes, it is used as an optical fiber, a photomask substrate for semiconductor lithography and a stepper lens for semiconductor lithography. In addition, it is used as a large-scale photomask substrate for flat panel display (FPD) lithography, including liquid crystal and OLED displays.

Large-size photomask	Preform for optical fiber
substrate for FPD

Optical fiber made of preform

generation, and the growing demand for energy-saving home

Magnetic alloys

appliances and industrial equipment associated with factory

Recovered magnets

Magnet

automation. We are strengthening our supply chain to meet

Sintered block

powder, scraps

this demand.

In recent years, it has also become increasingly important

Products that use them

Finished magnet

from the perspective of economic security to secure a stable

product

supply of rare earths as raw materials. The Shin-Etsu Group

has technologies for separating and refining rare earths, and

in addition to recycling magnet powder from the processing of

rare earth magnets, we are also working to utilize rare earth

magnets recovered from end-of-life products, also known as

"urban mining."

Shin-Etsu Chemical Co., Ltd.

ANNUAL REPORT 2023

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Shin-Etsu Chemical Co. Ltd. published this content on 26 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2023 23:43:20 UTC.

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Japan's Nikkei tracks Wall Street higher; Fed policy meeting in focus	Apr. 30	RE
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Japan's Nikkei extends early gains as BOJ holds rates steady	Apr. 26	RE
Japan's Nikkei rises as chip shares rebound; BOJ decision in focus	Apr. 25	RE
Shin-Etsu Chemical Plans to Fully Acquire Mimasu Semiconductor Via Tender Offer	Apr. 25	MT
Shin-Etsu Chemical Attributable Profit Down 26.6% in Fiscal 2024 Amid Geopolitical Challenges	Apr. 25	MT
Shin-Etsu Chemical Co., Ltd. Provides Consolidated Earnings Guidance for the First Quarter Ended June 30, 2024	Apr. 25	CI
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Shin-Etsu Chemical Co., Ltd. made an offer to acquire 56.1% stake in Mimasu Semiconductor Industry Co., Ltd. from a group share of shareholders for ¥66.7 billion.	Apr. 24	CI
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Japan's Nikkei slips on caution ahead of US inflation data	Apr. 09	RE
Japan's Nikkei climbs as chip shares gain, softer yen lifts sentiment	Apr. 09	RE
Japan's Shin-Etsu Chemical to invest $545 million in chip materials plant	Apr. 08	RE
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Shin-Etsu Chemical to spend $546 mln to build microchip materials plant -Nikkei	Apr. 08	RE
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Japan's Nikkei ends flat as chip gains counter Uniqlo owner's retreat	Mar. 26	RE
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Shin-Etsu Chemical Develops the Industry's First Water-Based, Fast-Curing Silicone Resin That Does Not Use Emulsifiers	Mar. 14	CI
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Japan's Nikkei breaches 40,000 level for first time as tech stocks soar	Mar. 03	RE

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