Electronics starts with us. We are the company behind the companies, advancing digital living. Our main focus is on materials and solutions for the electronics market. We realigned our portfolio toward the accelerated digitization and the growth of data. This drives the need for more and higher sophisticated semiconductor chips and displays. Today, we are optimally positioned to leverage our key strengths: With a well-balanced and broad technology portfolio of materials and equipment, industry leading R&D and a global production network close to our customers, we have become one of the most relevant suppliers of materials and solutions for the semiconductor and display industries – and are on track to further expand our position. In addition, our decorative and functional solutions for innovative surfaces of all kinds make life more colorful. The business sector consists of three business units: Semiconductor Solutions, Display Solutions, and Surface Solutions.
In recent years, we successfully developed into a leading player in the global electronic materials market. In 2021, we introduced our growth program “Level Up” and announced our plans to invest significantly more than € 3 billion in innovation and capacities until the end of 2025.
Electronics accounted for 18% of Group sales in 2022, and its share of EBITDA pre (excluding Corporate and Other) was 16%. The EBITDA pre margin was 29.7% of net sales.
Semiconductor Solutions is at the heart of Electronics and is enabling the digital transformation in communications, mobility, and healthcare. The overall semiconductor market is seeing strong growth with the rising adoption of digital technologies driven by recovering automotive markets and increasing smartphone demand amid wider availability of 5G networks. As almost every electronic device uses one of our products, we are advancing virtually every aspect of digital living. We are developing solutions for smaller, faster, and more powerful devices. Semiconductor Solutions is the largest business unit in terms of sales within Electronics and offers materials, delivery systems, and services for the semiconductor industry.
The Semiconductor Materials business supplies products for every major production step in wafer processing, including doping, patterning, deposition, planarization, etching, and cleaning. Specialty cleans, photoresists, and conductive pastes for semiconductor packaging round off the portfolio. Intermolecular is our center for complex material solutions in Electronics, located in San Jose, California, USA. There, we explore, test, and develop combinations of advanced materials for next-generation electronics. Compared to conventional methods, our approach provides significant time savings in the material development process, faster learning cycles, and detailed findings on new material combinations to provide a unique service for customers.
We recently completed the acquisition of the chemical business of Mecaro Co. Ltd., a publicly listed company based in Korea. The combination of Mecaro’s thin films technology competencies and our global footprint will provide our customers with additional value. The acquisition will support our capacity expansion plans and the execution of our Level Up investments in Korea.
Delivery Systems & Services develops and deploys reliable delivery equipment to ensure the safe and responsible handling of gases and liquid materials with the highest quality and safety standards for electronic manufacturers. We are increasing the global manufacturing capacity of our state-of-the-art specialty gas, liquid chemical, and slurry delivery equipment to meet the growing demand in memory and foundry. In October 2022, we inaugurated our new DS&S site in Kaohsiung, Taiwan, which will more than double the current regional supply and serve Taiwanese as well as global customers. The facility will complement the existing thin film materials R&D and production site, bringing together key expertise for integrated semiconductor manufacturing solutions. We also continued to make progress in ramping up our manufacturing capacity in the United States with our new facility in Chandler, Arizona, USA, which will begin operations in the first half of 2023. These new factories will supplement our ability to support customers’ increasing demand and boost our overall global footprint of manufacturing facilities around the globe. At many customer sites, semiconductor technologies and equipment are operated and maintained by our MEGASYS® Total Gas and Chemical Services team. As part of a global operations infrastructure, we are a premier supplier of semiconductor fab and sub-fab services to the worldwide electronics industry.
Our Display Solutions business unit includes the businesses Liquid Crystals (LC), Organic Light-Emitting Diodes (OLED), Photoresists, Smart Antenna and Liquid Crystal Glazing. With the proliferation of multiple applications and display trends, the display industry’s technological requirements are significantly expanding. We support our display customers in developing novel display technologies and product concepts for applications, while also addressing new requirements that have emerged from the Covid-19 pandemic. We are active in a broad range of display materials, including LCs, OLED, and Display Patterning Materials (DPM).
To meet the increasing demand for high-purity OLED materials in Asia, we completed our OLED manufacturing capacity expansion project in Korea in June 2022. We have invested around € 20 million to install sublimation equipment and OLED vacuum deposition units at our OLED Application Center (OAC) in Poseung, Korea. This investment is also expected to ease the supply chain disruptions caused by Covid-19 and build supply agility and resilience for our customers. By bringing production closer to customers, we are also demonstrating our commitment to a more sustainable future. We aim to reduce our product carbon footprint by choosing the shortest supply routes, expanding capacity for circular material flows and adopting the latest production technologies.
In Liquid Crystals, we continue to see very dynamic market developments. Covid-19 has accelerated the market shift toward China and increased competition. We maintained our position as a technology leader with our XtraBright™ products, winning new projects for large-area displays as well as high-resolution mobile devices. Our OLED and photoresist materials are used in multiple free-form display products. Our low-temperature processable positive tone photoresists are widely used to pattern on-cell touch sensors. These sensors enable a thinner display structure, which is crucial for foldable devices.
Our Liquid Crystal Glazing business is receiving an increasing number of commercial orders as real estate investors regard eyrise® s350 instant solar shading as one of the key elements to deliver on their ESG (Environment, Social, Governance) objectives. One of the largest real estate investors in Switzerland is currently installing eyrise® on all facades of its signature project in the center of Zurich.
In 2022, our customer Kymeta announced a cooperation with OneWeb, a Low Earth Orbit (LEO) satellite communications company. Our LC-based licriOn™ technology is leading the way to various mobility applications of the future. LicriOn™ enables extensive connectivity access, even in remote areas where fast internet connections are unavailable or unaffordable today.
In our Surface Solutions business, we provide our customers with solutions that help them to create innovative surfaces of all kinds. Our materials enable more beautiful, more resistant, and more effective product designs. Our main focus is on proactive solution development in close cooperation with our customers as well as expanding our portfolio through innovation in all areas. The core markets for Surface Solutions are automotive coatings, cosmetics, and, to a smaller extent, industrial applications. We are serving these markets with functional and decorative solutions. With a broad portfolio of active ingredients, we enable cosmetics manufacturers to enrich their skin care products with moisturizing, protecting, and anti-aging effects. Moreover, our functional solutions serve many innovative applications, from dirt-repellent and easy-care surfaces to laser markings of plastic parts and cables.
Surface Solutions is successfully implementing its strategic transformation. After substantial investments in expanding our production capacities in 2021, we are now further investing in digitalizing and modernizing our effect pigment production plants around the globe. In September, we opened the first fully automated unit for the digital color measurement of our pigment products in Gernsheim, Germany. The investment of nearly € 10 million is just one example of how we are further advancing the digitalization of our production processes. In the past two years, Surface Solutions was adversely impacted by the Covid-19 crisis. Despite the current challenging economic environment, the business is back on a successful organic growth track.
* The contents of this chapter or section are voluntary and therefore not audited. However, our auditor has read the text critically.