BRG Townsend Projects Electronic Chemicals to Grow At Over 9% a Year.

Business & High Tech Editors

MOUNT OLIVE, N.J.--(BUSINESS WIRE)--Nov. 16, 2000

Consumers are demanding that home and office electronic components be cheaper, smaller, work faster, use less energy and last longer. This has imposed great challenges to both the manufacturers of these products and their electronic chemical suppliers. How these chemical suppliers are positioning their global businesses, growing and achieving profits, while assaulted by demands for both lower prices and higher technology, is the subject of a global study by consultant BRG Townsend, Inc., A Business Research Group Company (BRG).

The electronic chemicals market, valued at over $21 billion in 1999, is projected to grow at an annual rate exceeding 9% through 2004, reaching nearly $33 billion. The business is divided into two sectors: semiconductor chemicals (SC) and printed circuit board (PCB) chemicals. In 1999 the global semiconductor chemicals business accounted for 53% of all electronic chemicals. It includes substrates, photoresists, wet chemicals, sputtering materials and gases and liquid crystals. The global printed circuit board chemicals business represented the other 47%. It encompasses laminates, resists, plating and processing chemicals, cleaning agents and degreasers, and adhesives. Thus, the relative proportions of these two businesses is expected to shift through 2004, when 63% of the total value will be in SC's and 37% in PCB chemicals. This shift is due to semiconductor chemicals contributing more to meeting the market demands for enhanced performance than do PCB chemicals.

The strategies various suppliers have adopted are numerous, and include cost cutting in commodity materials, divestitures, and specializing in high value niches. In addition, there are mergers, acquisitions and joint ventures that achieve global distribution, broader product array and dominant product positions, as well as shared financial risk and investment costs. Finally, some have chosen vertical integration into manufacturing facilities while others focus on state of the art technology commitments and attention to foreign investment advantages. Some examples of strategies include:

- Technology licenses with other suppliers to offset high development costs in
photoresists such as Clariant with Hyundai Electronic Industries and Mitsubishi
Chemicals.

- The merger of the two largest suppliers of photomasks DuPont Photomasks and
Photronics/Align-Rite to form one dominant supplier of this pivotal product.

- A strategic alliance in North American by Japanese suppliers, MEC and
Uyemura.

- Rohm and Haas adding two additional companies to its Shipley business to
expand chemical product lines.

- Cookson, which supplies both laminates and processing chemicals, planning to
acquire additional PCB chemicals businesses.

- The take-over of AlliedSignal by Honeywell yielding a vertical integration
(although some believe this could lead to a less competitive wet chemicals
market).

The trend toward miniaturization imposes particular challenges on manufacturers and their chemical suppliers. Smaller components require thinner line widths, finer etching, more uniform and smaller grain size during the sputtering process, adhesive targeting, multi-layer laminates, and ways to expel excessive heat (which is blamed for 75% of all electronic device failures). Chemical suppliers offering products that contribute to these enhancements will have a market advantage.

Suppliers in each of the three major supply regions - Europe, Asia, and NAFTA - have developed niche positions in high value specialty products, avoiding the fierce competition in oversupplied commodity products. Here, numerous innovations have been made including:

- Customized photoresist products for specific wafer applications

- "Smart cut" insulating layer in silicon wafers

- Gold and silver plating

- Oxide alternative techniques

- A new electroless process for depositing nickel

- Special laminates to support Ball-grid array technology for

interconnecting systems

The electronic chemicals market will see great change over the next four years, in technology and the number and alliance of suppliers. Those that have implemented strategies to meet consumer demand for electronic components that are smaller, faster and more durable will leave others in their wake.

These are just some of the highlights from the new report, THE GLOBAL MARKET FOR ELECTRONIC CHEMICALS now available from BRG Townsend, Inc. BRG is recognized as a world leader in providing business information on specialty chemicals. In addition, we bring over 50 years of experience serving the global plastics, chemicals, additives, pulp & paper, and related materials industries. For more information on this, or on any of BRG's products and services, please access our website www.brgtownsend.com or contact Sales & Marketing Manager, Abbe Scheiner at 973-347-5300 or e-mail [e-mail].