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North American Electronic Chemicals and Materials Markets - Investment Analysis
Frost & Sullivan, June 2007, Pages: 62
The Frost & Sullivan research service titled North American Electronic Chemicals and Materials Markets: Investment Analysis provides growth monitor, sector scorecard, and M&A analysis. In this research, Frost & Sullivan's expert analysts thoroughly examine the following segments: IC fabrication materials, PCB materials, and display materials.
Wet Process Chemicals Sub-segment Offers Opportunities for Private Equity Investors
With technology-intensive customers (semiconductor industry) driving down prices, the wet process chemicals market is becoming increasingly commoditized. The top ten participants account for approximately 70 percent of the market and due to rapidly changing technology, customers are demanding higher purities. However, it is estimated that further investment in higher purities would lead to lower profitability levels than tier 1 and tier 2 semi-grades. Due to these factors, the market has undervalued the wet process chemical makers and it is therefore the right time for private equity investors to invest in the wet process chemicals participants and take advantage of the rising valuation multiples due to expected consolidation.
The technology-intensive solar panel display materials, the flexible display materials, and the organic display materials sub segments may also prove rewarding for venture capital (VC) firms during the period 2007-2010. In certain niche areas, such as conductive inks, flexible conductive materials, and conductive polymer materials, the development of materials in the United States, could appeal to the VC investors. 'The printed electronic market which is set to witness approximately 38 to 50 percent growth between 2006 and 2010 is moving towards mass production,' notes the analyst of this research service. 'Industry experts opine that the RFID industry is likely to be one of the early adopters of printed electronics materials.'
Introduction of 45 nm Transistor by Intel and Proposed Announcements by TI and IBM Set to Fuel Growth
Quiet significantly, in January 2007, Intel announced one of the biggest breakthroughs in fundamental transistor design: transistors with 45 nm circuit dimension. Intel will replace the traditional silicon dioxide and polycrystalline silicon and use different transistor materials such as hafnium-based high-k material and metal gate transistors in the production of 45 nm transistor. Rival companies AMD and IBM announced similar plans to produce 45 nm transistors based on hafnium high-k material in early 2008. While approximately 12 new materials were introduced as a result of the transistor miniaturization in 2005, the current miniaturization (45 nm) is expected to see the introduction of up to 30 new materials. Going forward, in 2009, the transistor circuit dimension may well shrink further, increasing the need for newer materials.
Overall, the North American electronic chemicals and materials market is approaching maturity. 'Among the market segments, the IC fabrication materials segment, which accounted for nearly 76 percent of the overall market in 2006, continues to outperform other segments and drives the overall market,' says the analyst. 'Going forward, lean manufacturing, supply chain management, capital efficiency, offering leading differentiated technologies, and joint development agreements with the right partners are likely to be key to market success.'
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