07 November 2005 00:01 [Source: ICB Americas]
AIR PRODUCTS has officially unveiled the completion of its latest nitrogen trifluoride (NF3) expansion, boosting capacity by almost 50 percent to over 2,000 metric tons per year. Driven by the increased demand for liquid crystal displays (LCDs) and semiconductors, Air Products has raised capacity at least six times since 1995.
NF3 is used to remove film deposits left on the glass on which LCD panels are cut, and is also used to decontaminate the chemical vapor deposition chamber used to manufacture semiconductors.
Deutsche Bank Securities notes that Air Products’ new capacity is about twice the capacity of the company’s nearest competitor. The company’s nameplate capacity in 2003 was estimated at 2.5 million pounds, followed by Kanto Denka Kogyo (KDK) (1.45 million pounds), Mitsui Chemical (1.325 million pounds), Central Glass (660,000 pounds) and BOC Edwards and Korea-based Daibeck each with 275,000 pounds.
In 2003, global NF3 sales are estimated between $220 million to $240 million, with Air Products holding 40 percent of the market. KDK followed with 21 percent, Mitsui 20 percent and Central Glass with 9 percent, according to Deutsche Bank.
Deutsche Bank expects much of Air Products’ new NF3 capacity to serve the LCD and 300mm silicon wafer markets. “Seven new electronic facilities will come on-line in 2006 to serve the Asian electronics markets,” says Deutsche Bank analyst David Begleiter “[Air Products] management cited new Asian electronics contracts as a positive indicator of growth for the coming year.”
According to Merrill Lynch, recent shipments of NF3 to Samsung’s latest Gen-7 LCD fab have picked up as the fab is now operating at roughly 50 percent utilization. Air Products is a major supplier of NF3 to Samsung. A Gen-7 fab needs about 190 to 250 tons of NF3 per year while a 300mm wafer fab needs about 35 to 50 tons per year—although 300mm fabs also require higher purity, and thus more-expensive NF3. Until five years ago, Air Products’ NF3 demand was mostly for semiconductors.
NF3 growth is projected to increase by about 25 percent per year into 2007. In the fourth quarter of 2005, NF3 volumes once again offset price declines. Air Products’ sales have been growing steadily. The company had overall sales of $5.86 billion in 2001, with NF3 contributing almost 3 percent. Sales for the company last year were $7.41 billion, with NF3 at about 2 percent.
But El Segundo, Calif.-based electronics consultancy iSuppli warns that demand has been weakening for LCDs, and that prices may drop toward the end of the year. Some industry observers have expressed concern that as the price of LCDs drop, so might the price of NF3. At the beginning of the year, NF3 was selling for $46 per pound. But some estimate a drop to $35 per pound by 2007. However, iSuppli projects restored LCD growth going into 2006, with LCD TV shipments increasing to 61.2 million units by 2009—up from 8.9 million units in 2004.
Oversupply is not yet an issue, but other producers have been ramping up. In September, DuPont Fluoroproducts began building a 450 metric-ton-per-year NF3 unit in Changshu, China. This facility is due on line in 2007, and was specifically built to supply the semiconductor and LCD markets.
Mitsui has expressed a desire to become the leading global supplier of NF3, and recently completed a capacity expansion to 900 metric tons per year, and started constructing another unit in the 300 to 600 ton-per-year range.
But new producers entering the market seems unlikely. “NF3 is difficult to manufacture, difficult to replace, and difficult to supply reliably in large volume,” says Begleiter.
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