ANNUAL REPORT 2022

Business Principle

The Group strictly complies with all laws and regulations, conducts fair business practices and creates unrivaled value for society and industry through the provision of key materials and technologies.

Contents

02 Value Creation Story

02 Continuously creating new value in response to societal demand and changing requirements

04 Promptly responding to changes in economic conditions and the business environment and forging unrivaled strengths

06 A value creation process unique to the Shin-Etsu Group

08 Financial Highlights

09 Non-Financial Highlights

27 Business Activity

  1. Technologies, Materials and Products of the Shin-Etsu Group
  2. Business Overview
  3. Infrastructure Materials

32 Electronics Materials

36 Functional Materials

39 Processing & Specialized Services

40 Management Foundation

10 Management Message

10 Chairman's Message

12 President's Message

46 Sustainability

14 Sources of Our Competitiveness

50 Data Section

15 Financial Capital

50 Ten-Year Summary

52 Shin-Etsu Group Companies

16 Manufacturing Capital

54 Investor Information

18 Human Capital

55 Corporate Information

  1. Intellectual Capital
  2. Social and Relationship Capital
  3. Natural Capital

Editorial Policy

This report is compiled and issued every year so that shareholders, investors, and all other stakeholders can gain an understanding of the Shin-Etsu Group's corporate activities. This report covers Shin-Etsu Chemical Co., Ltd. (Shin-Etsu Chemical) and its consolidated subsidiaries in Japan and overseas. In compiling this report, we referred to the Value Reporting Foundation's (VRF)* International Integrated Reporting Framework and the Guidance for Collaborative Value Creation developed by Japan's Ministry of Economy, Trade and Industry (METI).

In the 2022 edition of the report, we added pages with information about each of the six types of capital that function as the sources of the Shin-Etsu Group's competitive advantages. We also redesigned the layout of the report so the overall picture of the Group's value creation could be easily digested by readers.

*The VRF was established in June 2021 through a merger between the International Integrated Reporting Council (IIRC) and the US Sustainability Accounting Standards Board (SASB).

For more detailed information, follow the links below:

IR Information

Sustainability Information

https://www.shinetsu.co.jp/en/ir/

https://www.shinetsu.co.jp/en/sustainability/

Materials for

the Future

Since its founding 96 years ago, Shin-Etsu Chemical has long contributed to the development of society by continually providing high-quality materials and products to meet the needs of the times. With issues in society becoming increasingly diversified, we believe there to be missions that only the Shin-Etsu Group can fulfil as a company in the industrial upstream sector.

A new material for wearable devices that we brought to market in 2021 harnesses the special characteristics of silicone, thereby eliminating any wearer discomfort and stably collecting electrocardiogram (ECG) signals. By addressing rising demand for home-based medical care, we are helping to bring about a longevity society.

We provide society with materials for the future. By continuing to deliver products of high added value to the world, we seek to contribute to the realization of a sustainable society.

ANNUAL REPORT 2022

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Value Creation Story

Continuously creating new value in response to societal demand and changing requirements

Since its establishment in 1926 as Shin-Etsu Nitrogen Fertilizer Co., Ltd., the Shin-Etsu Group has continually transformed its business with an eye to the future, and today holds the top share of the global market for many products, including PVC and semiconductor silicon.The Shin-Etsu Group will therefore continue to create new value in response to societal demand and changing requirements aiming to become a leading global company in products that are fundamental to industry and daily life.

FY2005

Net sales exceeded ¥1.0 trillion

Overseas sales

FY1994

Domestic sales

Net sales exceeded ¥500.0 billion

Capital investment

FY1997

Conducted capital investment worth ¥136.3 billion

1990

2000

Initiatives of

the Shin-Etsu

Group

1950s-1960s

1970s-1980s

Formation of business foundation

Enhancement of existing businesses and

global expansion

Societal issues and needs

Silicone products when production first started

  • Launched PVC production
  • Began production of silicon wafers
  • Started production of silicones
  • Launched production of cellulose derivatives
  • Development of domestic social infrastructure and increased demand for construction
  • Spread of home appliances associated with high economic growth

Shintech's newly opened PVC plant

  • Started production of PVC in Texas, USA
  • Overseas expansion of semiconductor silicon business
  • Overseas expansion of silicones business
  • Began production of rare earth magnets
  • Launched production of optical fiber preform
  • Development of global social infrastructure and economy
  • Development of integrated circuits for semiconductor devices and diffusion of personal computers
  • Spread of communication networks toward an information- oriented society

2 Shin-Etsu Chemical Co., Ltd.

Total sales

2.5 trillion

FY2021

¥2,074.4

Net sales exceeded ¥2.0 trillion

billion

2.0 trillion

FY2018

Net sales exceeded ¥1.5 trillion

1.5 trillion

Overseas sales

¥1,607.1

billion

FY2019

1.0 trillion

Conducted capital investment worth ¥265.0 billion

FY2007

Conducted capital investment worth ¥268.4 billion

0.5 trillion

Domestic sales

¥467.3

billion

0

2010

2020

2021

1990s-2000s

2010s-2020s

New challenges/Corporate structure reform/

New growth strategy development

Enhancement of international competitiveness

300mm wafer building (Shin-Etsu Handotai's Shirakawa Plant)

  • Acquired PVC and cellulose businesses in Europe
  • Built two PVC plants in Louisiana, USA
  • Started mass production of 300mm silicon wafers
  • Began production of silicone monomers and polymers in Thailand
  • Commercialized photoresists and photomask blanks businesses
  • Increase in infrastructure demand in Europe, the Middle East, and Africa
  • Diffusion of cell phones
  • Spread of the Internet
  • Growth in global awareness of the need to reduce environmental impact

Shintech's new plant in Louisiana

  • Started production of ethylene in the US (ensured stable and flexible product supply by establishing an integrated production system for PVC from raw materials)
  • Began integrated production of rare earth magnets in Vietnam
  • Started mass production of low-dielectric resins (5G-related products)
  • Growth in US housing demand
  • Global EV shift
  • Development of next-generationhigh-speed communication technologies (AI, IoT, 5G)

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Disclaimer

Shin-Etsu Chemical Co. Ltd. published this content on 26 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2022 13:38:00 UTC.