Electronic Materials

Focus on the Future

Technology was the key to Electronic Materials' resilient performance amid the macroeconomic adversity that prevailed among its customers during much of 1998. Rohm and Haas's businesses in this group adapted well to short-term market fragility, even as they took a number of decisive steps to improve their platforms for significant long-term growth.

Electronic Materials sales for the year totaled $398 million, $1 million less than in 1997; volume was also flat. Earnings for the group were $45 million, down 13% from 1997.

The biggest single news item for Electronic Materials came at the end of the year, when Rohm and Haas announced an agreement to acquire LeaRonal, a New York-based specialty chemical company with sales of $242 million in its 1998 fiscal year. Following the close of the acquisition in January 1999, Shipley Company began the process of combining LeaRonal with its printed wiring board (PWB) business. The resulting division of Shipley, named Shipley Ronal, unites two very strong and highly complementary technologies for printed wiring boards, metal finishing and other specialty applications. Shipley Ronal expects its full range of specialty chemical products for the PWB industry to be a particularly strong driver of future growth.

In January 1999, Electronic Materials also increased its ownership stake in Rodel, Inc., to 48%. Rodel, a worldwide leader in chemical-mechanical planarization (see page 16), delivers specialty products based on this key enabling technology to makers of semi-conductors around the world. Rohm and Haas first bought part of Rodel in June 1997, and has long admired that company's technologies and entrepreneurial spirit.

The PWB and semiconductor industries that Shipley and Rodel serve suffered from significant macroeconomic weakness in 1998. Asian economic turmoil caused lower than expected activity in end-use markets (see page 13). Industry prices, meanwhile, generally decreased in each region of the world. Electronics producers in many markets deferred capital spending projects intended to increase capacity, in some cases by sizable margins.

Shipley Company's microelectronics business performed relatively well in this environment, and was able to maintain good sales and earnings. Throughout the year, the company strengthened its worldwide leadership position in deep-UV and advanced I-line photoresists, the leading-edge technologies used in semiconductor photolithography (see diagrams below). Shipley also improved its position in anti-reflective coatings, another important component of semiconductor fabrication. Results were best in Europe and North America. In Asia, Japan and Korea posed the most difficult operating environments, while Taiwan delivered strong growth.

Shipley's PWB business faced one of its most difficult years around the world. New technology development did not fully offset the overall business situation in 1998, but is expected to contribute strongly to improved results in 1999. The addition of LeaRonal's complementary technologies and manufacturing capacity will drive future growth and profitability. In particular, as printed wiring board designs become increasingly complex, Shipley Ronal foresees its photoresists for PWB imaging increasing their share of market.

Electronic Materials took a number of other steps to improve its operations during the year. Shipley fully integrated the commercial and manufacturing operations of Pratta, which was acquired in 1997. LG-Shipley, a joint venture with South Korea's LG Chemical Group, was implemented in the first half of 1998. Operational discipline and raw material costs were a high priority in 1998 and will remain a focus for continued improvements in 1999.

In late 1998, the worldwide electronics industry began to show initial signs of recovery. Barring further economic shocks, Electronic Materials expects its customers to return to their historical growth rates during the course of 1999.

Enabling Technology for Microelectronics
Personal computers, cellular telephones and other information appliances use silicon "chips" etched with many layers of interconnecting microelectronic circuits. Each chip's architecture calls for thousands of lines, which are drawn by a process called photolithography. These lines, often only 0.18 micron wide, enable the chip to perform thousands of instructions per second. Each chip must therefore be manufactured to exacting standards with precision instruments and carefully selected materials.
Click here to view the process.

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