09 October 2000 00:00 [Source: ICB]Rohm and Haas has made a success of electronic chemicalsin a tough market. Karen Higgenbottom reports
With many companies such as Johnson Matthey and Laporte exiting electronic chemicals, US company Rohm and Haas (R&H) stands out as a success story in this sector, anticipating as it is sales of $1.2bn worldwide in electronic materials this year.
This Philadelphia-based company has built up its electronic materials business through a series of strategic acquisitions. In 1982, R&H took a 30% stake in Shipley, a producer of printed wired board (PWB) materials with a small but growing position in photoresists, the light-sensitive polymers used to create circuit lines on silicon wafers.
Ten years later, R&H bought the remaining 70% of Shipley, which now forms the cornerstone of its electronics materials business.
###9400###R&H then embarked on an aggressive acquisition path, turning its sights towards Rodel, a producer of specialised polishing pads and chemicals slurries used in chemical mechanical planarisation (CMP). To start, 27% of the business was purchased in 1997, with the holding upped to 80% this year. This helped to strengthen Shipley's semiconductor business.
Then in January last year, R&H purchased LeaRonal, a $250m-a-year supplier of metal-based process chemicals used in PWBs, semiconductor packaging and electronic connectors.
To strengthen its PWB business, R&H made a small, strategic acquisition in the purchase of Pratta Electronic materials, a producer of solder flux and other PWB support materials.
The Lea-Ronal gain complemented the Shipley and Pratta PWB businesses and gave R&H an almost complete product line - missing only one vital element, that of dry photoresist film. That piece of the pie was filled with the $5bn acquisition of Morton (ECN 8 February 1999). This deal gave R&H a complete $200m business unit, specialising in PWB materials.
The LeaRonal and Morton deals more than doubled R&H's electronic materials sales on a pro-forma basis in 1999, upping them to $885m. Then came an 80% stake in Silicon Valley Chemical Laboratories, a supplier of ancillary semiconductor materials.
###9401###R&H capped off its spending spree by buying the photoresist business of Japan's Mitsubishi Chemicals, which has annual sales of $25m. A leading Asian producer of deep ultra-violet photoresist chemistry, it is strong in Japan, South Korea and Taiwan.
In 1999, R&H decided to reorganise its electronic materials business around its core business of Shipley into three distinct business units: semiconductors manufacturing; electronics and industrial finishes (EIF) and PWBs. On the PWB side, the Pratta, LeaRonal and Morton operations combined with the existing Shipley PWB activities to form Shipley Ronal. This took a 36% share of the global PWB market in 1999.
On the semiconductor side, Shipley microelectronics formed a business unit that included the company's existing semiconductor products and Silicon Valley Chemicals' product line.
EIF consisted of Shipley's activities and LeaRonal's operations.
R&H sees Rodel as one of the fastest-growing electronics businesses, as CMP is adopted by makers of high-end computer chips. About 50% of Rodel's revenues come from this segment, and the growth in its CMP business in the fourth quarter of 1999 was 75% over the previous quarter. R&H estimates that Rodel has a 47% share of the worldwide CMP market.
Last year, Rodel formed an alliance with the 3M company for the commercialisation of slurry-free chemical mechanical planarisation polishing of semiconductors and precision polishing of memory disk products.
Rodel is linked to Shipley microelectronics through a programme for metallisation and organic solutions for advanced integrated circuits. It joins together key semiconductor materials and processes such as photoresists and developers, CMP pads and slurries.
'Part of our strength in electronic chemicals is that we can supply the full range of products for the production of the circuit board,' says Patrice Barthelmes, president of Shipley Europe.
'This means that by providing all the chemistries we can generate cost savings,' he explains.
Barthelmes is fully aware of the challenges lying ahead in an industry driven by technological development.
'It's crucial not to miss one generation in microelectronics. Our technology on the PWB side is extremely good and we have a well-adapted product portfolio.'
Other challenges faced by R&H include the trend for lower wavelengths in semiconductors, says Barthelmes.
He adds: 'When you are dealing with complicated technologies you must invest in your products'. Thus R&H currently invest 10% of its sales in electronic materials in R & D.
Barthelmes attributes Shipley's success within R&H's electronic materials business to the fact that Shipley has managed to retain its individual characteristics.
However, it was not all smooth sailing for Shipley in Europe, for problems arose from the integration of its various acquisitions. 'Within the EIF business, we experienced some supply chain problems due to the fact that this activity follows a different business model,' says Barthelmes.
As a region Europe, according to Barthelmes, presents particular challenges to electronic chemicals, where it is vital to keep apace with technology.
He estimates that growth for the PWB business in Europe stands at 8-10%/year with similar growth rates for the semiconductor sector.
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