Shin Etsu Chemical : Business Activity (2.0 MB) pdf

Business Activity

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

Business Activity

PVC is indispensable to our lives mainly in the areas of infrastructure, housing, and agriculture. We meet global demand for PVC as the world's largest supplier.

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.

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 silicones that support people's lives and industries, we provide a stable supply of high value-added products. We also help alleviate environmental impacts and food shortages.

Meeting the diverse needs of customers by leveraging the advanced technological capabilities developed by the Shin-Etsu Group.

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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
	(Lithium		derivatives
Compound		Synthetic
Tantalate)
semiconductors			pheromones

Infrastructure Materials

Demand for both PVC and caustic soda has remained strong and we hiked product prices to reflect

the circumstances surrounding raw materials. In particular, with the exception of period for scheduled maintenance, all plants, including those of Shintech in the U.S., continued to operate at full capacity against a backdrop of housing shortages in major countries and fervent infrastructure demand in emerging economies.

Net Sales		Operating Income
(¥ billion)		(¥ billion)
900.0	857.1	400.0
			317.7
600.0
485.8		200.0
300.0		99.6
0		0
2020	2021	2020	2021
	(FY)		(FY)

Semiconductor		Materials		Aroma
Minor	Pulp	chemicals
silicon
metals
	Gallium		Acetylene		Low
Rare earths	Silane			Organic	dielectric
		materials
& Poly
			acid
	Silicon	Technology
		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
technology	Group	technology	derivatives

Electronics Materials

The global supply shortage of semiconductor devices remains unresolved. To meet strong demand from our customers, we shipped the maximum amount of semiconductor materials as possible, including silicon wafers, photoresists, and photomask blanks. Production of rare earth magnets was partially limited by governments' COVID-19 prevention measures and natural disasters affecting our production bases in Asia, but we made sure operations continued as much as possible

in order to cater to brisk demand in all fields, including automotive, industrial equipment, and hard disk drives.

Net Sales		Operating Income
(¥ billion)			(¥ billion)
900.0			300.0
		708.9			244.7
600.0	595.6		200.0	206.0
300.0			100.0
0			0
	2020	2021		2020	2021
		(FY)			(FY)

LIB anode						Photoresists
				Industrial
material
CVD*1 &		Polymerization		salt
	PVD*2			technology
Boron	Plastic & Film				Chorides,
Pyrolytic				Fluorine
	processing
			Caustic soda
boron nitride				compound
	technology
(PBN)	Silane
					Silane
Synthetic	Molybdenum					Liquid
Silicon			Chlorine &		fluoroelastomers
quartz/
Fluorine		Vinyl	Ethylene
Quartz cloth	PVC/
polymers	acetate
		Silicones
	Photomask				Silicones
	blanks

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

Functional Materials

For our silicone product lineup, we expanded our silicon technology-based solutions, including products that help lower greenhouse gases emissions, and continued to beef up the resilience of our supply network. We also raised product prices in response to high raw material costs. At the same time, we brought to market many new and distinguishing products and made every effort to increase sales by striving to ship as much as possible even in the midst of distribution disruptions. We also took steps to raise prices on our cellulose products.

Net Sales		Operating Income
(¥ billion)		395.6	(¥ billion)
400.0		100.0	94.7
300.0	314.2		70.7
200.0			50.0
100.0
0			0
	2020	2021	2020	2021
		(FY)		(FY)

goods

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

Shipments of semiconductor wafer-related containers for both transporting use and manufacture process use, and sales of input devices for automobiles were also strong. Sales of PVC wrapping film for food packaging increased as a result of the consolidation of KitcheNista Co., Ltd.. We hiked prices for mainly silicone-related products and PVC-related products.

Net Sales		Operating Income
(¥ billion)		(¥ billion)
120.0	112.6	25.0
101.0		20.0	20.9
80.0		16.3
		15.0
		10.0
40.0
		5.0
0		0
2020	2021	2020	2021
	(FY)		(FY)

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Business Activity

Infrastructure Materials

PVC is indispensable to our lives mainly in the areas of infrastructure, housing, and agriculture. We meet global demand for PVC as the world's largest supplier.

Business Overview

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

In the infrastructure materials business, we provide products indispensable to many aspects of our lives, from pipes for water supply and sewerage systems and other types of infrastructure to housing, agriculture, and daily necessities. These products include PVC, caustic soda, and polyvinyl alcohol (POVAL). PVC, in particular, is a general-purpose resin used widely as an infrastructure material in mainly construction and civil engineering in the form of piping for water supply and sewerage systems and window frames (PVC-framed windows), for example. With three production bases in the U.S., Europe, and Japan, the Shin-Etsu Group has the capacity to produce and stably supply the global market with 4.44 million tons of PVC resin each year.

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.

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.

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 contributes to the 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-framed windows 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.

Alumina

Cathode Materials for Lithium-Ion Batteries

Car Windshields

Topic

• In Japan, the material recycling rate for PVC is about 33%*, higher than that for other types of plastic.

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

Competitive Advantages (PVC)

Shintech: Augmenting PVC production capacity

Shintech, one of the Group's subsidiaries in the U.S. and the world's largest manufacturer of PVC, boosted its annual production capacity to 3.24 million tons by bringing online

Shintech PVC production capacity	End of 2023
3.62 millions of tons (plan)

(Millions of tons)	Approximately
4
	35x
3

• World's biggest production capacity
• Stable quality and stable supply to customers
• Favorable raw material circumstances in the US, Energy supply stability
• 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
Rock	Chlorine
salt		Worldwide Sales
	Caustic soda

a new plant with an annual production capacity of 290,000 tons at the end of 2021 to meet brisk demand in mainly North America and emerging countries. It also plans to complete the construction of a new plant with an annual production capacity of 380,000 tons by the end of 2023, thereby increasing its total production capacity to 3.62 million tons. In order to stably supply PVC to customers worldwide, in 2020 the company established an integrated production system starting from raw materials, chiefly by producing in-house some of the ethylene required for PVC manufacturing.

	2
	1		0.1 millions of tons
			at time of company
0		establishment
		1974	1978	1981	1984	1988199019921994	1997 20002001	20082010	2015	20212023
																																							(FY)

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Business Activity

Electronics Materials

Electronics Materials

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

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.

Business Overview

In the Electronic Materials segment, we offer photoresists, photomask blanks, and encapsulant materials used in the semiconductor manufacturing process, while remaining at the forefront of the industry as the world's largest manufacturer of silicon wafers. In addition, we supply rare earth magnets, which are indispensable for reducing the size, weight, and power consumption of motors used in hybrid and electric vehicles, industrial equipment, and home appliances, as well as high- purity synthetic quartz used as a material for optical fiber and large-scale photomask substrates.

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

Competitive Advantages

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.

Pattern formation

Special photosensitive materials (photoresists) are applied, circuit patterns are baked in and developed, and the surface is processed.P34

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

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

Products supplied by the Shin-Etsu Group

Silicon metal

Quartz crucibles

Silicon carbide fine-ground powder

Silicon wafers

Wafer cases	Rare earths
(yttrium oxide)

Quartz glass for use in the semiconductor manufacturing process

Synthetic quartz	Photoresist
photomask substrates

Photomask blanks	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

Semiconductor devices

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

Final product

Encapsulant materials	Liquid encapsulating
materials
	Thermal interface materials

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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 appliances, 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 analysis, 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.

Encapsulant Materials for

Semiconductor Devices

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, contributing to the reduction of device manufacturing costs.

Electronics Materials

LED Packaging Materials

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

Photoresists

Synthetic Quartz

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

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

Photomask Blanks

Semiconductor lithography process (pattern formation)

	Products oered by the Group
Light source	Photomask
Blanks	Photoresists
		Light-shielding
		film
		Synthetic
		quartz
		substrates
Pellicles
		Electron beam
		lithography

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.

Optical fiber made of preform

Large-size photomask	Preform for optical fiber
substrate for FPD

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, Shin-Etsu Chemical has established state-of-the-art photomask blank mass production technologies, including multilayer film structures and permeable membrane structures with excellent light resistance properties.

Condenser
lens
	Development
Photoresists
	Etching
	Remove
Silicon wafer	photoresist
	Photomask

Topic

Enhanced photoresist production capacity in Japan and Taiwan

To meet the growing demand and technological evolution of photoresists, which are indispensable for advanced semiconductor manufacturing, we made capital investments totaling 30 billion yen at our production bases in Japan and Taiwan. In the summer of 2019, we started production of photoresist materials in Taiwan, one of the demand centers, to promote efforts to operate multiple production bases and improve supply stability. Furthermore, in February 2021, we added more facilities to boost our production capacity. We are also working to enhance capacity at our Naoetsu Plant (Niigata

Shin-Etsu Electronics Materials Taiwan Co., Ltd. (Yunlin County, Taiwan), which increased its

Rare Earth Magnets

Rare Earths

Prefecture) in Japan, completing construction of a new building in February 2022.

photoresist production capacity.

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. Shin-Etsu Chemical is engaged in the manufacture of these magnets from the separation and refinement of rare earths as raw materials to processing. Furthermore, it is reliably supplying high-quality rare earth magnets

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

Topic

Began mass production of the SLK series of low dielectric constant thermosetting resins for 5G products

with advanced features by means of the development of its own grain boundary diffusion method, which reduces the amount of heavy rare earth used, while maintaining high performance.

contribute to improved testing safety at medical sites.

In response to the full-fledged rollout of the next-generation 5G communication standard, we have invested approximately 3 billion yen in preparing for mass production of the SLK series of low dielectric constant thermosetting resins. For the first phase, our annual production capacity is 80 tons. The SLK series is a high-strength, low- elasticity resin with low dielectric properties comparable to fluoropolymers, and will be used in electronic devices, circuit boards, antennas, radar domes, and other applications in the superhigh-frequency band of 5G. We will contribute to the development of next- generation high-speed communication technology by developing applications for the 5G market, which is expected to expand going forward.

Low Dielectric Constant Thermosetting Resins (SLK series)

Electric vehicle

Data center

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