Thursday, October 9, 2014

Electronics Segments at Japanese Chemical Companies

Several Japanese public chemical companies have separate business segments representing what these companies consider to be their businesses associated with “electronics”.  Companies that report “electronics” segments in their annual reports include:  Asahi Glass; Asahi Kasei; Nagase; Mitsubishi; Sanyo; Shin Etsu: Showa Denko; Sumitomo; and Tokyo Ohka Kogyo. 

From the annual reports of these companies, the following are some of the products and services that the companies lump into their electronics segments:

battery materials
CMP slurries
color filters
digital camera filters
display device materials
electrolytes for aluminum electrolytic capacitors
encapsulation materials
flexible display materials
glass-related materials and processing
hard disk media
high-grade chemical management services
high-purity chemicals
large-scale integration (LSI)
light emitting diode (LED) materials
liquid crystal display (LCD) materials
magnetic sensors
optical products
organic lighting materials
organic photovoltaic models and materials
photo mask materials
photo resist materials
polycarbonate sheets and films
quartz products
rare earth magnetic alloys
recording media
semiconductor materials
solar cell materials
surface treatment materials
touch panel materials

Also from the annual reports and the financial data on the electronic segments, for all the companies, the average compound annual growth rate (CAGR), over the last three years,  for electronic segment sales was a negative one percent.  The total electronics segment profit, for all companies, as a percentage of total electronics segment income was thirteen percent (658 billion yen total electronics segment income/5,156 billion yen total electronics segment sales).

Perhaps one of the strongest sectors in the Japanese chemical industry is the sector that supports Japan’s electronics industry, an industry generally recognized as a world leader.  And, therefore, probably the chemical company segments (for example the segments discussed above) supporting Japan’s electronics industry are also world class.    A good example of this is the recent 2014 Noble Prize in Physics awarded to two Japanese researchers (and also to an American researcher) for inventing efficient blue light-emitting diodes (LEDs), which has enabled bright and energy-saving white light sources. 

The above financial results for the chemical companies’ electronics segments are not impressive, and are in-line with a less than robust Japanese economy.  However, the segment's technical capabilities are probably equal to the best in the world, and best in Asia.  With Asian future economic growth, and its demand for electronics, if Japan’s chemical companies offering chemical support can tap into supporting this demand, these companies’ futures should be bright.

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