Change and Innovation ～ with the Power of Chemistry ～Sumitomo Chemical
IR Day 2022 Spring June 1, 2022

Rita

GX
Jiri

Today’s Agenda
Section.1

FY2022 Performance Forecasts andRecent Topics

Section.2

IT-related Chemicals Sector

Section.3

Energy & Functional Materials Sector

Change and Innovation ～ with the Power of Chemistry ～Keiichi Iwata, President and Executive Officer

Masaki Matsui, Senior Managing Executive Officer

Kingo Akahori, Senior Managing Executive Officer
1Change and Innovation ～ with the Power of Chemistry ～Sumitomo Chemical
IR Day 2022 Spring

Section.1 FY2022 Performance Forecasts and Recent Topics

Rita

GX
Jiri

2

Today’s Agenda

01

FY2022 Business Performance Forecast

02

Recent Topics

Change and Innovation ～ with the Power of Chemistry ～3

01Change and Innovation ～ with the Power of Chemistry ～FY2022 Business
Performance
Forecast
4

01

FY2022 business performance forecast
Change2,765.3
234.8

FY 2022
Forecast

3,120.0
200.0+354.7-34.8

Essential chemicals& Plastics

53.5

41.0

-12.5

Energy & Functional Materials

20.1

18.0

-2.1

IT-related Chemicals

57.8

61.0

+3.2

Health & Crop Sciences

42.3

47.5

+5.2

Pharmaceuticals

61.7

33.0

-28.7

Others

-0.6

-0.5

+0.1

Operating Income (IFRS)

215.0

180.0

-35.0

Net Income Attributable to Ownersof the Parent

162.1

125.0

-37.1

Naphtha price¥ 56,900/kl¥ 80,000/kl

Exchange rate

¥ 112.39/$¥ 125.00/$

FY 2021

RevenueCore Operating Income

Change and Innovation ～ with the Power of Chemistry ～(Billions of yen)

5

２
01

Core Operating Income Forecast(Essential chemicals & Plastics)

Factors in business performance improvement at Petro Rabigh andvolumes recovery from Chiba scheduled maintenance last year, as wellas substantially worse margins in synthetic resins

Change in Core
Operating Income

41.0 bn. yen (-12.5 bn. yen yoy)Pricedifference-31.0 bn. yen

Billions of Yen

60

△31
+16.5

40

41.0

20

0

FY21

Price

Cost

Volumes, FY22
etc.

Change and Innovation ～ with the Power of Chemistry ～conditions due to low market prices forsynthetic resins in the face of higher raw
material prices

Cost
difference+2.0 bn. yen

+2

53.5

 Deterioration in trade terms andVolumes
difference, etc.
+16.5 bn. yen Improvement in equity method PL fromPetro Rabigh Volumes recovery from scheduled
maintenance last year at Chiba Worksand Singapore

6

２
01

Petro RabighBusiness performance has recovered since FY21 thanks tostable operations and a recovery in market prices(MUSD)
400

Refined products
Petrochemicals

Petro Rabigh Operating Income

Net profit after tax

100
(200)

1Q

2Q

3Q

2019

4Q

1Q

2Q

3Q

4Q

1Q

2020

2Q

3Q

2021

4Q

1Q
2022

(500)
2022 1Q Actual Net profit after tax : 193 MUSD
Refined products: Turned profitable on margin improvement driven by higher
prices for petroleum products
Petrochemicals: Ethane advantage and other factors contributed to maintaining
profitability in the face of higher naphtha prices and stagnant market
prices.
Change and Innovation ～ with the Power of Chemistry ～Cumulative loss
eliminated as of theend of 2022 1Q
7

２
01

Core Operating Income Forecast (H&CS)
Profit growth still small as higher raw material prices and increased
expenses due to business expansion eat up benefits from weaker yen
and expanded sales of INDIFLIN® in South America

Change in Core
Operating Income

47.5 bn. yen (+5.2 bn. yen yoy)Pricedifference-13.5 bn. yen

Billion of Yen

60

+26.2

△13.5
40

△7.5
20

47.5

42.3

0

FY21

Price

Cost

Volumes, FY22
etc.

Change and Innovation ～ with the Power of Chemistry ～ Deterioration in trade terms and conditions on

increased raw material prices despite rise inmethionine market prices
 Crop protection products also impacted
heavily by increased raw material prices

Cost
difference-7.5 bn. yen

 Increased expenses associated with business

Volumes
difference, etc.
+26.2 bn. yen

 Increased shipment volume of crop protection

expansion such as rapid ramp-up of
INDIFLIN® and new pipeline development
expenses

products in North and South America, etc.
 Increased take-away from exports due toweaker yen

8

２
01

INDIFLIN® Launch in Brazil

Focused on early and rapid ramp-up of B2020 in largest target market, Brazil
Combination of INDIFLIN® with tebuconazole
Combining the two ingredients enables broad
anti-fungal spectrum and excellent resistancemanagement
Deploy mainly targeting soybean rust
Early registration
Organize production
footprint
Pre-launch activities

 Acquire within 4 years of filing for active ingredient registration(normally takes 8 years in Brazil)
 Organize formulation plant in Brazil close to the market
 Hire and train sales reps Confirm cultivated land performance with public
evaluation bodies
 Marketing leveraging social media, podcasts, etc.
 Select priority wholesalers and build out direct sales
infrastructure for large-scale farms

INDIFLIN® used
Change and Innovation ～ with the Power of Chemistry ～Benchmark used

Soybean rust market in Brazil
Soybean planted acreage: 39 million ha
Acreage with rust: 38 million ha

Rust market scale: 2 billion USD

Reference) Japan's acreage: 37.79 million ha

Estimation of INDIFLIN® revenues
・Pursue premium positioning
・Fully leverage B2C sales organization
・Expand formulation manufacturing
structure

21

22

23

24
9

02

Recent Topics
1. Further improve business portfolio
2. Governance

Change and Innovation ～ with the Power of Chemistry ～

10

02-1

Business metabolism
Strengthenbusinesses

ExpandAgrosolutions business

Complete filing for Rapidicil (new herbicide)

Pharmaceuticals

New plant in Oita for CDMO of small molecule drugs

Carbon neutral• nitiatives for the recycling of resources• Development of carbon negative resin materials• Another business selected as a GI Fund Project• Awarded Grand Prize in the JCIA* Technology Awards

Exitbusinesses

ShrinkChange and Innovation ～ with the Power of Chemistry ～Exit caprolactam business(planned for end of October 2022)

Exit dyestuffs business(planned for end of March 2023)*Japan Chemical Industry Association

11

02-1

GX
Preserving theecosystem

New potential blockbuster
herbicide: Rapidicil®

Complete filing for Rapidicil® (new herbicide)
Features

Rapid effect compared to existing products
Exhibits sufficient effect with low doses

Demand with no-till
farming Land is not tilled before seeding,thereby avoiding CO2 emissions
that would have resulted fromtilling and suppressing thegeneration and release of CO2
resulting from the decompositionof organic matter in the soil
 Rapidicil® is optimal as an herbicide
for use before crop sowing on notill farming land covered in weeds
thanks to its rapid effect and broad
efficacyNon-selective herbicide with efficacy
against a wide range of broad-leaved
weeds and grass weeds

Low-dose chemical
crop protection
 Supports efforts to comply with
agrichemical risk regulations invarious countries

In combination with
PPO tolerant crops
Nonselective
Weedherbicide

Tolerant
crops
develope
d by
Bayer

 Can also be used during crop
emergence. Expect sales toramp up in full after tolerant
crops are launched.

Expect it to grow into global blockbuster
Change and Innovation ～ with the Power of Chemistry ～

12

02-1

New plant in Oita
for CDMO of small molecule drugs

State of the market
Strong demand continues to outsource manufactureof small molecule drugs


Growth to continue in diversification of modality and small moleculedrugs
Pharmaceutical companies are concentrating resources on new drug
development and sales activities and outsourcing production

Priorities of pharmaceutical companies shifting
to stable quality and stable supply

Quality concerns and supply anxieties are driving production back toJapan

Our strengths
Comprehensive support capabilities of the leading Japanese
CDMO in small molecule drugs
Process development
capabilities

Commercialization
proposal capabilities

GMP measures

Quality assurance

Stable supply

Adding capacity at Oita plant to be completed in FY24
Change and Innovation ～ with the Power of Chemistry ～CDMO business pursued by the
Sumitomo Chemical Group
Broad lineup from small molecule toregenerative medicine & cell therapy Small molecule drugs(contract mfg)
 Small molecule drugs(generics)
 Nucleic acid medicine
 Regenerative medicine andcell therapy products

CDMO business scale*
FY21

Approx.

30bn. yen

FY27

Approx.

60bn. yen

Substantially grow business scale during theperiod of the next Corporate Business Plan

*Combined total of Sumitomo Chemical and S-RACMO 13

02-1

GX

Carbon Neutral

Initiatives for the recyclingof resources

Materials recycling

Chemical recycling
Completed test equipment tomanufacture ethylene for
manufacturing polyethylene
derived from ethanol

Develop high-rigidity
polyethylene Sumicle Contribute to horizontal
recycling by unifying resinmaterials used in packaging
Material
Recycling

Development of plastics recycling
technology using a special ink
 Use “disappearing ink” to achieve
horizontal recycling of printed
packaging(In collaboration with PILOT)

ChemicalRecycling Begin delivering samples
October 2022
 Aim to commercialize in FY 2025

Circular systems
for resources
Test equipment for manufacturing
ethylene derived from ethanol

Accelerate initiatives toward a circular system for resources
to contribute toward achieving a recycling society
Change and Innovation ～ with the Power of Chemistry ～

14

02-1

GX

Carbon Neutral

Development of carbon negative
resin materials

Strengths and roles

Joint development of carbon negative automotive and textile
material made from methane, which has about 25 times thegreenhouse effect of CO2
Newlight technologies
 Using proprietary

fermentation technology
to manufacture PHA* resin× Succeeded in challenging
compounding ofpolypropylene and PHA
resin Become carbon negative by using
recovered methane as a raw  Provided mostly
material
achromatic PP with
AirCarbonTM

chromatic capabilities
equivalent to polyester
textile Carbon negative PP
compounds forautomobiles

 Carbon negative
chromatic PP textile
material*polyhydroxybutyrate Product name: AirCarbon
Change and Innovation ～ with the Power of Chemistry ～

15

02-1

GX

CarbonNeutralAnother business selected as a GI
Fund ProjectGreen Innovation Fund Project*National Research and Development Agency, New Energy andIndustrial Technology Development Organization (NEDO)

A fund launched by NEDO * to provide assistance over a span of up to 10 years from a 2 trillion-yen
fund for R&D and validation projects undertaken by companies with ambitious goals aimed at
becoming carbon neutral.
Projects already selected that are related to
Sumitomo Chemical
Producing olefins through direct cracking ofwaste plastics
Ethanol production using synthetic gas derived
from waste plastics
Efficient alcohol production from CO2
Olefin production from alcohols

Newly selected projects that are related to
Sumitomo Chemical
Cathode-recycling related technology(In collaboration with JERA) Development of cathode direct recycling technology
 Development of upcycling technology that raises
performance to at least the same level as before recycling

Development and demonstration of a system
for separating and capturing CO2(In collaboration with OOYOO)

 Through tie-up with OOYOO, aim to develop anddemonstrate a system for separating and capturing CO2
from plant exhaust gas using membrane-based separation

Chasing world-changing innovations to become carbon neutral
Change and Innovation ～ with the Power of Chemistry ～

16

02-1

Awarded Grand Prizein the JCIA Technology Awards

GX

CarbonNeutralHydrochloric acid oxidation process technology contributes to reducing
environmental impact. Awarded Grand Prize in JCIA Technology Awards
Hydrochloric acid oxidation process
Synthesis of
isocyanate

Cl2

Isocyanate

Substantially reduces environmental
impact by recycling by-product HCl into
raw material
Energyconsumption

HCl
Hydrochloric
acid oxidation
catalyst

Benefits from our technology

UrethaneGHG
emissions

Suppress to 1/15
or less
Reduce by

2 million tons/year

over next several years(Compared to processes such as electrolysis)

Past awards FY2003: Development and commercialization of ammonium sulfate-free caprolactam process
received
FY2019: Development and commercialization of a process for manufacturing propylene oxide (PO)using cumene, which has low environmental impact and is free from co-products

Change and Innovation ～ with the Power of Chemistry ～17Introduction of a Stock
Compensation Plan

02-2

Introduced restricted stock as part of executive compensation

 Changes ratio of fixed vs. variable remuneration to 1:1 from 7:3
 Variable remuneration designed to a ratio of 7:3 short-term incentive (bonus) vs. mid- to long-term
incentive (stock compensation)

Makeup of compensation upon achievement of business performance targets under the
Corporate Business Plan

Stock
compensation

BeforeVariable
remuneration
About

30%

After

About 15%

Bonus
Base
remuneration

Fixed
remuneration
About

70%

VariableBonus
remuneration About
About

50%

35%

Fixed
remuneration

Base
remune About
ration50%

Share value with shareholders and investors and aim to achieve sustainableenhancement of enterprise value
Change and Innovation ～ with the Power of Chemistry ～18

Reference Materials

Change and Innovation ～ with the Power of Chemistry ～

19

２
参考

(FY22 Forecast) Business Environment

What was a recovering global economy is now experiencing increasing turbulencefrom the outbreak and protraction of the war in Ukraine
FY 2021
FY 2022

Reopening of economic activities with vaccination

Full-on economic recovery from COVID-19

Economic activity sparked by fiscal and monetarymeasures

Weaker yen

Acceleration of DX and trends toward carbon neutral
Prolonged tensions between US and China
Supply chain disruptions

IMF World Economy Growth Rate*
US 5.7%
Europe 5.3%
China 8.1%

Change and Innovation ～ with the Power of Chemistry ～Break out and protraction of thewar in Ukraine
More expensive energy and materials

Inflation risk

2021
5.9％

Prolonged tensions between US and China2022
4.4% → 3.6％

4.0% → 3.7%
3.9% → 2.8%
4.8% → 4.4%

Intensification of supply chain disruptions

・ Revised down on impact from COVID-19
and Ukraine war
・ Further revisions possible depending on
direction of Ukraine war*Source: World Economic Outlook Database: April 2022
(released April 21). 2022 version previously released January 2022.

20

参考

(FY22 Forecast) Business Environment
Field

Petro
chemical&Plastics

Market prices for
crude oil andnaphthaPrices remain high for crude oil and naphtha due to supply anxieties
associated with economic sanctions on Russia. Business performancestrong as Rabigh ethane advantage expands However, energy costs are up
due to high raw materials & utilities costs

Supply & demand andmarket prices

Market prices down on increased supply mainly from new Chinese plants
Weak demand due to uncertainties about the economic outlook（PE、PP、MMA）

Automobiles

Outlook for FY 2022

Globalautomobile
production
volumes
TV panel trends

Displays
SmartphonedemandChange and Innovation ～ with the Power of Chemistry ～2021: About 76 million vehicles --> 2022: About 81 million
The worst is behind us. But still not back to pre-COVID levels due toprolonged semiconductor shortages and the Ukraine war. (2019: About 89
million vehicles)
TV demand mostly flat as stay-at-home demand runs out of steam
TV panels are trending to larger sizes and prices are falling
Polarizer competition intensifying with the emergence of Chinese rivals
Smartphone demand mostly flat overall
Meanwhile, the shift to OLED progresses* Source: IHS publications

21

２
参考

(FY22 Forecast) Business Environment
Field

Semiconductor

Agrosolutionsbusiness

Outlook for FY 2022

Semiconductor
demandMarket expansion continues on greater demand for data centers, full-scale
penetration of 5G telecommunications, automotive electronics, etc.
(Semiconductor market: 2021 $553.0B --> 2022 $601.5B)

North America

Planted acreage expanding as in-channel inventories deplete.
However, the environment is harsh due to competition from generics(US planted acreage: 2021 87.2 --> 2022 91.0 million acres)

BrazilExports strong on rising prices for grains and weaker Real Planted acreage
growing

India

Demand is trending strongly in the absence of any particular weather events

Methionine

Methionine
market prices

PharmaTrends in major
products

Change and Innovation ～ with the Power of Chemistry ～Strong demand and rising prices for raw materials & utilities costs providing
bottom support for market prices
However, costs are rising, too.
Lower sales of Latuda in North America due to loss of exclusivity
Booked lump sum for Ulotaront license in the previous fiscal year
Post-launch ramp up of Roivant products is the most crucial point* Sources: WSTS (March 18, 2022) for the semiconductor market and United States Department of Agriculture (March, 31, 2022) for US planted acreage.

22

Change and Innovation ～ with the Power of Chemistry ～Sumitomo Chemical
IR Day 2022 Spring

Section.2 IT-related Chemicals Sector

Rita

GX
Jiri

23

Today’s Agenda

01

Business Overview

02

Review of the Former Business Plan

03

New Business Plan：Business Environment：Basic Direction：Major Action Plan

04

Long-term Target toward the Late 2020s

Change and Innovation ～ with the Power of Chemistry ～

24

01

Change and Innovation ～ with the Power of Chemistry ～Business Overview

25

01

Major Products and Markets

 Developing business primarily in both display-related and semiconductor-related materials
Our Major Products

Displays

Polarizing films

Touchscreen panels

olymer light-emitting
materials

Our Customers’ Products

Color filter
Liquid crystal cell

End Markets

TVs/Computers

Backlight unit

OLED

LCD panels

OLED panels

Color resists

Smartphones

Semiconductors

Automobile

Photoresists

Processing
chemicals
Functional
chemicals

Change and Innovation ～ with the Power of Chemistry ～Compoundsemiconductor
epiwafers

Logic ICs
(CPU etc.)
Radio frequency devices(for Amplification of radio
signals)

Memory ICs(DRAM/NAND etc.)
Power devices(for Power
conversion)

Wireless base stations
26

01

Major Business Locations

 Building a business network centered in East Asia, an area with a high concentration of
display-related and semiconductor-related industries

Change and Innovation ～ with the Power of Chemistry ～

27

01

Display-related Materials Business Contribute to creating displays with outstanding portability, visibility and operability
 Deliver high-value-added products by combining our material development capabilities
with our optimization technology

OLED PanelLCD Panel

Display cover materials

Polarizing film

Cover glass
Cover window film

Glass substrate

Circularly polarizing film
Liquid crystal-coatedpolarizer/
Liquid crystal-coatedretardation film

Color filter layer
Color resist
Liquid crystal layer

Touchscreen panel

TFT layer
Aluminum targets
Processing chemicals

Thin film encapsulation
OLED layer
Polymer light-emitting materials
Small-molecule light-emitting
materials etc.
Polyimide substrate

Polarizing film
Backlight unit
Change and Innovation ～ with the Power of Chemistry ～:Our products

28

Silicon Semiconductor-relatedMaterials Business01

 Contribute to the continuous evolution of microfabrication technology
with super high-quality chemicals

1

Wafer cleaning
Processing chemicals

2Development

Photoresists

6

Resist stripping

8

Cleaning
Processing chemicals

Our products

EtchingDielectric/metal
selective etchantPhotomask

7

Resist coating
Photoresists

Metal thin film

5

Exposure

3

Aluminum sputtering target

Silicon wafer

4

Metal-Film deposition

9

DryingProcessing chemicals* In addition to the products illustrated above, also providing cleaner for back grinding process of silicon wafers

Change and Innovation ～ with the Power of Chemistry ～29Compound Semiconductor-relatedMaterials Business

01
High

Power
generation/transmission

Silicon carbide
SiC

Maglev
Shinkansen
Train Contribute to the creation of a more advanced society bysupporting technologies such as high-speed broadband
communications, energy saving, and autonomous driving (sensing)Our Products(Solid Line)

RenewableenergyData centers
AC/DC
adapters

Gallium nitride

Wireless charging

OutputElectric
vehiclesGallium nitride(SiC substrate)

GaN on SiC

Mobilecommunicationbase stations(GaN substrate)

GaN on GaN

SiliconLow

Power devices

Change and Innovation ～ with the Power of Chemistry ～Operating frequency

Smartphones

Gallium arsenide
GaAs

Radio frequency devices

High
30

01
02

Change and Innovation ～ with the Power of Chemistry ～Review of
the Former
Business Plan
31

02(100 millions of yen)

6,000

Financial Statements
Main factors of
profit expansion
from FY19-FY21•••

Improvement in business structure of display-related materials
Expansion of the silicon semiconductor-related materials businessStay-at-home spending caused by COVID-19(100 millions of yen)

600

5,000

500

4,000

400

3,000

300

2,000

200

1,000

100
0

0
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021
Net Sales/Sales Revenue (Left Axis)
Change and Innovation ～ with the Power of Chemistry ～Operating Income/Core Operating Income (Right Axis)
32

02

Achievements and Challenges Carried Over
from FY2019-FY2021

Core Operating
Income (100 Millions of Yen)FY2021Business Plan

350

Segment Total

FY2019-FY2021 Total

Financial Results

Business Plan

578

910

Financial Results

1,226

On top of securing business profit, invested considerable business resources in promising areas

Achievements in FY19-FY21

Polarizing
Films

Silicon SemiconductorrelatedMaterials

 Improved product portfolio
 Secured high market share for OLED smartphones

Challenges remaining•

Refine key materials developed in-house•

Improve competitiveness drastically by thesmartification of production, quality andsupply-chain management•

Realize resilient global supply-chain inconsideration of policies for economic securityof each country/region and various sorts ofrisks

 Accelerated business development in the automotive
field by making SANRITZ a subsidiary Developed cutting-edge products andexpanded the global business system
 Started mass-production of EUV photoresists
 Enhanced the development and evaluation system ofphotoresists for cutting-edge processes Expanded production capacity globally Established the key production technologies
Compoundof GaN substrates for next-gen power devices •Semiconductor-related Decided to introduce the demonstration facilities forMaterials
high through-put process of large-sized GaN substrates
Change and Innovation ～ with the Power of Chemistry ～Develop business in the fields of sensor,
telecommunication and power semiconductor
devices33

01
03

Change and Innovation ～ with the Power of Chemistry ～New Business Plan：
Business
Environment
34

03

Change of Business Environment
New
SocialIssuesDrastic increase in the amountof information processing andenergy consumption

Next-gen high-speed communications
High-efficiency power semiconductor devices

Silicon Semiconductor Devices
Competing/nextgeneration
technologies

Data Processing/Storage
Telecommunications
Input/Sensing/Detection

Display/Interface

Sensors

Displays

Autonomous driving/electrificationof automobile
AR/VR

Emergence ofcompetitors
Fiercer competition

Expansionof
New applications
Application

Displays•

SiliconSemiconductors

Aggressive capacity expansion of LCD-related materials by Chinese suppliers will intensify
competition in the LCD market. Next-gen displays emerge in the coming years.

•

Steady market growth will continue. Line-width shrinking and multilayer structure become
increasingly prevalent.

New Materials•

As next-gen high-speed communications or autonomous driving comes in, needs for higherperformance materials will emerge.

Change and Innovation ～ with the Power of Chemistry ～

35

03

Business Environment: Display Market

 TV: Surface area demand continuously increases by 3% to 4% per year as the average size of TV
increases.

 Smart- : Steady demand for high-end smartphones (from North American maker) and the growing adoption of
OLED panels by Chinese phone makers contribute to continuous increase of OLED ratio.
phone
TV Display Panel Shipments

Smartphone Display Panel Shipments

300

80%

1,200

55%

250

75%

1,000

50%

200

70%

800

45%

150

65%

600

40%

100

60%

400

35%

55%

200

30%

50%

0
(Million
Units)

50
0(Million
Units)

4

8

2020

2021

TV (LCD)

12

10
2022

TV (OLED)

2023

13
2024

15
2025

Area Share of Chinese Makers (Right Axis)

2020

2021

Smartphone (LCD)

2022

2023

Smartphone (OLED)

2024

2025

25%

Ratio of OLED (Right Axis)*Market data shown above doesn’t fully incorporate recent drastic changes to the economy. (Source: Sumitomo Chemical)
Change and Innovation ～ with the Power of Chemistry ～

36

03
TV
Polarizing
films

Business Environment:
Display Technology and Our Major Product Lineup
Liquid crystal display(LCD)

OLED display(Deposition-method White-OLED)

Polarizing
films(Printing-method OLED/
Quantum Dot OLED)

Circularly polarizing film

Linear polarizing film

Liquid crystal-coated retardation film
Color resists

Coloring
materials

MobileNext-generation display

Polymer light-emitting materials forprinting-method OLED

Liquid crystal display(LCD)

Glass substrate
OLED display(Rigid OLED)

Plastic substrate
OLED display(Flexible OLED)

Next-generation
display(Si-OLED for AR/VR, Micro LED,
etc.)

Circularly polarizing film
Linear polarizing film

Coloring
materials
Change and Innovation ～ with the Power of Chemistry ～Liquid crystal-coatedretardation film

Color resists

Liquid crystal-coated retardation film +Liquid crystal-coated polarizer
Quantum Dot resists
Color resists (Low-temperature curing type)
Mass-produced products in-house

New products developed in-house37

Business Environment:
Semiconductor Market

03 Demand for semiconductor devices is expected to steadily expand for the coming several years in thecontext of increasing CAPEX of data centers to accommodate DX, full-fledged deployment of 5G
communications, growth of metaverse-related devices, and rebound of automobile market alongside
electrification and/or autonomous driving

Semiconductor Market Trends
7,000
6,000
5,000
4,000

CAGR

 Memory Logic
Market Total

12%
12%
10%

3,000
2,000
1,000
0
(100 millions CY2016
Of USD)

CY2017Discrete
Change and Innovation ～ with the Power of Chemistry ～CY2018CY2019CY2020CY2021

CY2022(Forecast)

Optoelectronics

Sensors

Analog

Micro

Logic

Memory(Source: WSTS Semiconductor Market Forecast in March 2022/November 2021)

38

03

Business Environment:
Semiconductor Cutting-edge Technology Trends andour Major Photoresists
2017

DRAM line-width
generation

1X

Logic line-width
generation

10nm

2018

2019

2020

1Y
7nm /
7nm+

1Z

Rewiring
technology

1a

5nm

2023
1b

3nm

EUV photoresists(*1)

Applicable
photoresists(*1)

2022

Immersion ArF photoresists

Applicable
photoresists

Number of
NAND Layers

2021

48 layers

64 layers

KrF
photoresists
Wire bonding Flip-chip bonding

92 layers

128 layers≧200 layers

I-line/KrF thick film photoresists
FOWLP(*2)

Applicable
photoresists(*1)*1 ”Applicable photoresists” rows include the period in which we provide sample products
Change and Innovation ～ with the Power of Chemistry ～176 layers

FOPLP(*3)

3D packaging

I-line thick film photoresists*2 Fan Out Wafer Level Package *3 Fan Out Panel Level Package
39

03

Basic Direction:
Improvement of Business Portfolio

Long-term
TargetandBasic Direction• In parallel with further focusing on high-end products in the display and silicon
semiconductor-related materials businesses, we will establish the third businesssuch as telecommunication or sensor-related materials by the late 2020s.
• We are tackling action plans to achieve this target from FY22 to FY24.

~FY2021

FY2022~FY2024

Optimized global supply chain

Continue enhancing product portfolio

Accelerated business forautomobile
Enhanced R&D for
OLED-related materials

Expand business in silicon semiconductor-relatedmaterials and new fields
Research and develop new businesses
Commercialization by means of M&A, etc.
Change and Innovation ～ with the Power of Chemistry ～Displays

SiliconSemiconductors
New Business(Telecommunications, Sensors
etc.)

Well-balanced businessportfolio

Improved product portfolio
of display-related materials

Late 2020s

40

03

Basic Direction for the Business Fields
Basic Direction for the Business Fields

Display-relatedMaterials

Maintain competitive edge by leveraging our own coretechnologies
 Secure market share in existing high-end products Capture demand for materials for next-generation displays
 Continue restructuring of uncompetitive LCD-related materials

SiliconSemiconductorrelated Materials

Acquire business opportunities in response to market
expansion
 Securely capture growing demand Develop products that contribute to innovations in customer
processes

Create new businesses for the next generation
New Business Launch next-gen power device materials business and contributeto evolution in energy saving technologies
 Establish business in materials related to telecommunications andsensors, etc.

Change and Innovation ～ with the Power of Chemistry ～

41

03

Major Action Plan:
Display-related Materials Business Change of Business Environment
FY2020～FY2021•

Stay-at-home spending•

Secured high share of
OLED-related materials

FY2022～FY2024•••

End of stay-at-home spending
LCD panel market shifting to China accelerates
The new production lines of Chinese polarizing film
manufacturers go live one after another

Fiercer
Competition

 Common Action Plan
Keep a constant level of profit to avoid fluctuationin terms of the total profit of IT-related Chemicals Sector
1.

Further refine our own core technologies

2.

Enhance product portfolio

3.

Continue restructuring of uncompetitive LCD-related
products•••

Display-related Materials Business
Operating Income Margin

Differentiate our products by upgrading quality and competitiveness of key
materials developed in-house

Focus on high-end TVs, OLED smartphones, automobile and nextgeneration displays with the differentiated materials and quality

Downsize the existing product lines and improve the efficiency of R&D

Change and Innovation ～ with the Power of Chemistry ～

FY10

FY13

FY16

-FY12

-FY15

-FY18

FY19

FY20

FY21

FY24
(Target)42

Major Action Plan:
Maintain Competitive Edge of Polarizing Films

03

 Action Plan
Differentiation by technologies and quality
and thorough improvement of efficiency
High-end
TVs
OLED
Smartphones
Automobile
OthersManagement•

LCD: Focus on polarizing films for super large-sized
TVs which demand especially superior quality•

OLED: Secure high market share by improving our
liquid crystal-coated retardation film•

Maintain high market share by leveraging variety ofour products with a number of liquid crystal-coatedretardation films produced in-house and procured
from outside•

Expand business with our high-durability and wideviewing angle polarizing films••

Capture demand for high-end notebook PCs andmonitors
Thorough reduction of down-time and quality issues
by introducing advanced management methods for
production and supply chain

Change and Innovation ～ with the Power of Chemistry ～ Product Mix of Polarizing Films
100%

50%

0%
FY2018FY2021

FY2024(Target)High-end TVs

High-end smartphones

Automobile

Others43

Major Action Plan:
Polarizing Films for Automobile03

 Market Expansion of Displays for
Automobile

 Characteristics of our Products•

The market will expand in line with cars
equipped with autonomous driving and/or
mobile communication systems increasing•

Area of Displays for Automobile (Forecast)(Million square meters)
6

CAGR: 7%

Provide features contributing todriving safety and conforming
to advanced mobility design
Contribution to driving safety

Suitable for variety of designs

High
durability

Large
DisplaysWideviewing angle

Flexible form
processing

 Major Progress

4•

Sales of products doubled from FY19 to FY21•

Almost finished the development of products conforming to thenext-gen specs (see below). Start providing samples in FY2022

 Action Plan

2

Improve properties of products and expand business
•
0
2021

2028

(Source: Omdia, Display Long-term Forecast Tracker 3Q2021)

Change and Innovation ～ with the Power of Chemistry ～Improve durability and widen viewing angle to conform to thenext-generation European specifications for automobile displays
expected to be applicable from 2024 to 2025, and develop
business further in this field44

03

Major Action Plan:
Materials for Next-generation Displays Next-generation Displays and our Materials
Liquid crystal-coatedpolarizers

Foldable/rollable
displays

OLED displays(printing methods)

Liquid crystal-coatedretardation films
Flexible touchscreen
panels

Larger area

Cover window films
Polymer lightemitting materials
Color resists(Low-temperature
curing type)High refractive
clear resins
for micro lenses
Micro displays for
AR/VR devices

Zerocontraction
Ultra-thin

Quantum Dot
color resists

Change and Innovation ～ with the Power of Chemistry ～ Our Strengths••

Material development capabilities cultivated as adiversified chemical manufacturer such as organic
synthesis or optical design
Capabilities to suggest combinations of our materials
for better results or provide solutions

 Major Progress•

Rollable

Sales of products incorporating liquid crystal-coated films
developed in-house doubled from FY19 to FY21•

Applicable tolarger displays•

Protect OLED
layers fromheat damage

Started to supply polymer light-emitting materials for the
mass-production of OLED displays
Carrying out developments for ultra-narrow bezel OLED
displays or lenses of AR/VR glasses, etc. with special
properties of liquid crystal-coated optical films

 Action Plan

Applicable tothin-film/
ultrafineprocesses••

Develop and suggest materials to be requiredby customers seeking advanced technologies

Multidimensional approach based on our wide varietyof core technologies
Make our materials the de facto standard by providingthem from the first stage of customers’ R&D

45

Major Action Plan:
Silicon Semiconductor-related Materials

03

Photoresist market by light source (Forecast)(Million US
Dollars)

4,000
3,000

Others

ArF

•

EUV
EUV

CAGR

EUV:11%, ArF: 10%2,000 Major Progress

ArF•

Decided to expand development and evaluation equipment at the Osaka Works, whichwere originally decided to introduce in 2020, in order to respond to market demand
exceeding the original forecast
Organized global taskforce to develop and sell functional chemicals

 Action Plan
Strengthen development of photoresists for nextgeneration EUV lithography process

1,000
0

CY2021

CY2024

CY2030(Source: Fuji Keizai Co., Ltd. “Future Perspective and Reality of Semiconductor
Materials Market 2020” for 2021/2024, Sumitomo Chemical estimates for 2030)

Photoresists

Sumitomo Chemical’s Sales of Processing
Chemicals for Semiconductors (Target)
150
100

Functional
chemicals*

50
0（Index）

FY2021

FY2022

FY2023

Change and Innovation ～ with the Power of Chemistry ～FY2024

Reinforce our R&D systems and maximize use of the newest
evaluation equipment

Establish resilient global supply-chain
In consideration of policies for economic security of eachcountry/region and various sorts of risks•

High purity
chemicals

CAGR: 9%•

Expand supply capacity in a timely manner in an areaadjacent to customers
Discover customers needs and expand variety of
products•

Develop products satisfying customers’ requirements based on wet
chemical technologies accumulated in ICT-related materials
business* Dielectric/metal selective etchant or cleaner for back grinding process of silicon wafers, etc.

46

03

Major Action Plan: Next-generation Materials (i)Materials for Micro Displays and Sensors for AR/VR Devices

 Metaverse and our Materials

AR/VR Display Devices (World Wide)

Category
High-speed
broadband
networks

Market Size (100 Millions JPY)
CY2021(Forecast)

CY2025(Forecast)

CAGR

AR Display Devices

2,608

24,58475%

VR Display Devices

2,285

9,839

44%

(Source: Fuji Chimera Research Institute, Inc. “Future Perspective of AR/VR Related Market 2020”)

 Our Strengths

Interfaces
Data centers• Develop new materials for the boundary area by utilizing
technologies and know-how of quality assurance accumulated inboth display & semiconductor fields

 Major Progress
Category

Devices (example)

Our Major Products

Datacenters

Logic /memory semiconductor devices• Photoresists• Process chemicals

Networks

Radio frequency
devices• Compound semiconductor-relatedmaterials

Interfaces

Micro displays
Image sensors• Color resists(Low-temperature curing type)• Clear resins for micro lenses

Change and Innovation ～ with the Power of Chemistry ～• Started mass-production of low-temperature curing type color
resists for Si-OLED Action Plan

Suggest variety of solutions

Color resists(Low-temperature curing type)

Quantum Dot color resists

Micro OLED
(Si-OLED)

High transparent color resists

Micro LED

High refractive clear resins

Image Sensor
47

03

Major Action Plan: Next-generation Materials (ii)
GaN Substrates for Next-gen Power Semiconductor Devices

 Comparisons of Power Semiconductors
Type*GaN: Gallium Nitride Target Market

Characteristics

Silicon (Si)Cost competitivenessSilicon carbide Already in mass-production, excellent in high operating voltage
GaN* on Si

In the introduction period for consumer devices

GaN on GaN

Exceeds other type of devices in terms of operating voltage,
operating frequency and element size, though still at the R&D stage

Low loss, energy saving

 Major Progress
 Action Plan
•


•



•

Small-sized, small-footprint

Data centers

RenewableenergyEV

Contribution to carbon neutral

Development of element technologies for mass production of large-sized GaN substrates has almost achieved
the targets, now focusing on improvement of yield and throughput

Establish high throughput mass production technology forlarge-sized GaN substrates for power semiconductor devices

SourceContact layer

Target Schedule

P layer

Validation equipment for high throughput mass production begin operation in FY22-> Aim for large supply of large-sized GaN substrates to begin by FY24

Dielectric film

Create a market for GaN on GaN power semiconductor devices

Establish business scheme for earlier commercialization, including collaboration with a GaN
power device maker
Establish flexible supply chain in response to different requirements from different customers
with the strength having technologies of both GaN substrate and GaN epiwafer

Change and Innovation ～ with the Power of Chemistry ～Gate

GaN epiwafer(Drift layer)
Drain

GaN substrate＜Example of GaN on GaN Device＞

48

03

Major Action Plan: Next-generation Materials (iii)
Transparent Thin-film Antennas for High-speed Communications

 Characteristics of our products•

Develop antennas by making the most use of technologies of forming fine-pitch lines and existing facilities which have everbeen used to produce touchscreen panels for OLED displays

Repeater•for mobile•
communications

Thin and transparent, wide selection of installation locations
Improve communication environment in public transportation and buildings with multi-band signals(4G and 5G Sub6)•••

Transparent thin-film antennas that can be put on smartphone displays or car windshields
Complement the existing technologies of 5G antenna with multi-band signals (5G millimeter wave)
Motion sensor to recognize hand gestures is also being developed in parallel

Antennaon display

 Major Progress
 Action Plan

Demonstration of repeaters is in progress•

Capture the needs for expanding signal range and improving signal quality in the context
of popularization of high-speed communications
Antenna on Display

Repeater for Mobile Communications
Existing
repeaters

AoD
AiP
Repeatersdeveloped
in-house

Change and Innovation ～ with the Power of Chemistry ～AiPAntenna in Package(Existing technology)

Antenna on Display(New technology developed in-house)

49

01
04

Change and Innovation ～ with the Power of Chemistry ～Long-term Target
toward the Late
2020s
50

04

Profit Target of New Business Plan

Improve business portfolio
toward the late 2020s alongsidekeeping high level of profit

FY2021 (Result) vs FY2024 (Target)Core
OperatingincomeExchange rate Develop business in the field of nextgeneration displays Expand business for semiconductorrelated materials

 Establish the third business field
Change and Innovation ～ with the Power of Chemistry ～FY2021

FY2024578

580(100 millions of yen)(100 millions of yen)

112 JPY/USD

110 JPY/USD

Core Operating Income Change Analysis(100 Millions of JPY)

Displays

Fixed costs
increase, etc.

Rationalization, etc.
Silicon Semiconductors
New
Business51

04

Long-term Target toward the Late 2020s(100 Millions of JPY)

Displays

800

SiliconSemiconductors

600

New Business(Telecommunications,sensors, etc.)

Establish business portfolio toachieve higher profit

400

Improve product portfolio in the existing fields

200

Develop new products and expand new business•

0
FY2021

Late 2020s(112 JPY/USD)(110 JPY/USD)

Change and Innovation ～ with the Power of Chemistry ～Proportion of core operating income to be earned
by new business (Target)
 About 10% by FY2024
 About 20% in the Late 2020s

52

Change and Innovation ～ with the Power of Chemistry ～Sumitomo Chemical
IR Day 2022 Spring

Section.3 Energy & Functional Materials Sector

Rita

GX
Jiri

53

Today’s Agenda

01

Vision: Energy & Functional Materials Sector

02

Review of the Previous Corporate Business Plan

03

Overall Sector Figure under the New Corporate Business Plan

04

Business Strategy under the New Corporate Business Plan

Change and Innovation ～ with the Power of Chemistry ～

54

01

Vision:Energy & Functional
Materials Sector

Contributions to Sustainability

Change and Innovation ～ with the Power of Chemistry ～

55

01

Vision:Energy & Functional Materials Sector
Contribute to Solving Environmental and Energy Issues
through Innovative Technologies

Active injection of resources into growing businesses Increase the sales of core products and accelerate R&D□□
 Secure stable revenue sources through higher added value Improve profitability of underperforming business and products□□
 Create new business (in environment, energy and functional materials)
Change and Innovation ～ with the Power of Chemistry ～

56

01

Contributions to a Sustainable Society

Contributions from E&FM products
 Manufacturing with renewable energy:
Aluminum Reduce organic solvents: Emulsions andadditives
 Manufacturing with less environmental impact:
Resorcinol
Envir
 Water treatment: Aluminum sulfate, PAC
onme CO2 separationnt

 5G devices and base stations: Super
Engineering Plastics
 Semiconductor Production Equipment:
Alumina, High-purity Alumina

ICT Artificial dialysis membranes: Super Engineering
Plastics (PES) Insulin pumps: Super Engineering Plastics (LCP) Medical utensils: Medical PO
Change and Innovation ～ with the Power of Chemistry ～*SSS-certified products(Sumika Sustainable Solutions)

EnergyconservationEnergystorage

Healthcare Light-weight vehicles: SEP, aluminum Fuel conservation: Additives, synthetic rubber,
rubber products
 Light-weight planes: Super Engineering
Plastics
 Residential energy conservation: Heatstorage materials
 Study mfg processes that conserve energy:
Cathode materials
 LIB: Separators, cathodes, high-purity
alumina Next-generation batteries: Cathodes
 Ultra-high-voltage power lines: Resin
additives

Contributions toward
Carbon Neutrality57

01

Initiatives for Sustainability

E&FM: What We Strive to Be

Continue to supply high-performancematerials that contribute to thesolution of society's challenges
1. Leverage internal R&D capabilities todifferentiate products and establish
manufacturing methods based on
innovative technologies

Sustainability initiative examples
Approximation of sales of SSS-certified
products
Increase revenuesof SSS products

2X

2. Adapt to changing trends in society,technology and the markets, cultivate
businesses and deliver broadly acrosssociety
3. Pursue an optimal portfolio that
achieves both economic and social
value
Change and Innovation ～ with the Power of Chemistry ～Batterymaterials
about 70%

FY21 Actual

FY24 plan

02

Change and Innovation ～ with the Power of Chemistry ～Review of thePrevious Corporate
Business Plan
59

02

Business Performance:
Energy & Functional Materials Sector

Profit plan not achieved due to decreased sales driven by external factors in
Separators and PES.
450 （bn. yen）

30

Core Operating Income (right axis)
Sales Revenue (left axis)

400

23.0

350
300

31.0

19.2

25

20.3

20.3

20.1
20

250

RevenueCore Operating
Income390 bn. yen
31.0 bn. yen

15

200
150

10

Revenue

323 bn. yen

0Core Operating
Income20.1 bn. yen

50

FY 2017

FY 2018

FY 2019

Change and Innovation ～ with the Power of Chemistry ～FY 2020

FY 2021

FY 21 PlanFY 21 Results

5

100

0

Corporate Business PlanFY 21 Target

60

02
Achie
ved
P/L
plan

NonAchiev
ed
P/L
plan

Progress Made on Major Products under
the Previous Plan (FY 19-21)
Resorcinol

LCP
Acquired new demands for connector uses andincreased the ratio of valuable products

Achieved continual stable supply

Main reasons for missing plan

Measures underway

Separator

Unexpected development delay at customer
Lower sales price

Expected growth in customer demand during new plan
Thorough cost reduction
Develop new grades that support higher capacity

PES

Substantial decline in demand for aircraft

Accelerate new introduction to artificial dialysis
membrane and food container

AluminaStagnant demand for some high valueadded products

Develop new grades to expand application field

Despite the recent stagnation caused by external factors, there are high expectations toward
future growth. Pivot action plan to meet market needs and aim for substantial progress inbusiness performance in FY2024.
Change and Innovation ～ with the Power of Chemistry ～

61

02

Investment in growth businesses andportfolio optimization
Technology feasibility andequipment build-out

2019

2020

2021

2022

2023

Reap
benefits

2024

Tanaka Chemical:
Increase in production capacity
Koei Chemical:
Increase in production capacity
Taoka Chemical:
Increase in production capacity
High-purity alumina:

Build new NXA production equipment
Super Engineering Plastics:

Add LCP production capacity
Cathode materials:
Build new validation equipment

Commercial process validation

Decision made to exit low-profit business (EPDM, dyestuffs）
Change and Innovation ～ with the Power of Chemistry ～Construction Phase
Commercialization
62

03

Change and Innovation ～ with the Power of Chemistry ～Overall Sector
Figure under the
New Corporate
Business Plan
63

03

Overall Sector Figure under the Corporate
Business Plan (FY 2022 - 2024)
FY 2024 Plan

Strategy for the business division
Allocate investments and expand businessin growth areas
Battery Materials
 Separators: Development, capacity add and sales
expansion in accordance with advances in battery
capacity Cathode Materials: Expand sales of precursors.
Establish calcination technology and commercialize

Core Operating
IncomeROICore Operating Income
Growth Projection

Super Engineering Plastics
 LCP: Expand business with increased production
capacity. Expand sales into automotive and 5G highspeed telecommunications connectors

Decide direction for low-profit business390.0 bn. yen
31.0 bn. yen
6.4 ％Revenuevolume（bn. yen）

20.1

31.0

price
cost

Develop next generation business

Rationalization

 Develop new technologies such as solid-state battery
materials and cathode direct recycling
FY2021(actual)
Change and Innovation ～ with the Power of Chemistry ～FY2024(plan)64

03

Sector P/L Plan under the Corporate
Business Plan (FY 2022 - 2024)

FY2022 Forecast

Profit to fall below FY 21 level due to worse tradeterms and conditions and higher R&D expenses ingrowing business（bn. yen）

Decrease inprofit margin
due to higher
feedstock prices

20.1

Increase insales

・Separators
・Super engineering
plastics

△5.0

+5.4

FY2024 plan

Reap benefits frominvestments

Increase R&D
expense・Cathode materials
・Super engineering
plastics

△2.5
18.0

LCP and NXA
Increase in
sales

31.0

Separator
Increase insales

Taoka Chemical
Koei Chemical
Contribution fromnew equipment

Begin sales of cathodes
Precursor Increase insales

Change and Innovation ～ with the Power of Chemistry ～65

Focus on Growing Business(battery materials, SEP)

04

 Double the sales of growing business (battery materials and SEP) in FY 24
 Further allocation of management resources to accelerate growth after FY 24
FY 24
Revenue

Approx.

FY 22-24
Total capex

FY 24
Research
staff

Battery Materials & SEP

FY 24 research staff

Approx.

2X

70 bn. yen

About

FY 2021
Actual

FY 2024
BudgetChange and Innovation ～ with the Power of Chemistry ～70%of total 3-year
investmentin this sector25%
UP

FY 2021
Actual

FY 2024
Budget66

04

Change and Innovation ～ with the Power of Chemistry ～Business Strategy
under the New
Corporate Business
Plan
67

04

Market Environment of Battery Materials

 Expect the Lithium Ion Battery market to continue to expand out to 2035
 Project greater demand in automotive applications
Lithium Ion Rechargeable Batteries

LiB & Solid state batteries market projections(Unit: GWh)

376

LIB (consumer electronics)

Liquid electrolyte

CathodesFunctional material
that releases
lithium ions whilecharging andaccepts the ionswhile discharging(in use).

LIB (xEV)
Solid state batteries

1,904
299
1,362
161

108

2020

Anode

619

190

11
2025

Solid statebatteries ramp up
penetration
7% of batteries tobe solid state

2030

133
2035

Source: SC estimates based on Fuji Keizai (2020) "Overview of Next-generation Battery-related Technologies
and Markets" and Ministry of Economy, Trade and Industry (2021) "Survey on Technological Competitivenessby Sector".

Change and Innovation ～ with the Power of Chemistry ～Separator
Safety component that
separates cathode andanode and prevents shorting68

04

Separators for Lithium Ion Battery

Businessstrategy

Support a rapidly expanding EV market with our technologies• Increase production capacity to meet the increasing demand for automotive, expand sales
to new customers and pursue cost rationalization.
• Focus on expanding sales to consumer electronics applications. At Ohe Works, accelerate
response to changes in customer needs.

Automotive market

Consumer electronics market

・ Ramp up high-capacity batteries(46xx cylindrical)

・ Strong demand for performance

・ Strong demand forpricereductions

・ Price declines are more
moderate

Develop aramid separators that satisfy higher performance requirements
and extend competitive edge in automotive

Thorough cost reductions and productivity gains

Focus on this opportunity at cost-competitive
SSLM in South Korea
Change and Innovation ～ with the Power of Chemistry ～・ Ultra thin film for cell phones
・ High output for electronics and e-bikes

Focus on this opportunity by converting Ohe
Works (Ehime) into a multi-grade development& production plant69

Technical Advantages on
Aramid-Coated Separators

04

Market needs
 High capacity Rapid recharge
 High output

Separator thinner,
lighter and durable athigher voltage andtemperature

Advantages ofaramid-coated separators
High heat
resistanceLight-weight

Polymer design
against higher
voltage

Ultra thin

Suppresses
dendrite

Polymer structure ofhigher oxidation potential
derived from molecularorbital calculation

Change and Innovation ～ with the Power of Chemistry ～aramid-coatedseparators

ceramic-coatedseparators

Ions flow evenly

Ions flow unevenly

Li deposits evenly

Li deposits unevenly

Adjacent depositions
coalesce in small particles

Spread depositions grow in
long-fiber shape

Electron microscope Images
aramid-coatedseparators

ceramic-coatedseparators

Growth of Li dendrite was inhibited on aramidcoated separator.

04

Cathode materials

BusinessstrategyEnter market for high nickel-content cathodes.
Establish our proprietary calcination technology• Launch validation equipment on schedule and acquire customer certification• Develop cobalt-free cathode to help achieve a sustainable society■ Our future target

 Expect growth in market for high nickel-content
cathodesCathode market scale (by type)(Million tons)

3.0High-nickel

 Project market for highnickel-content cathodes
to grow to 1 million
tons by 2030

Other
2.0

1.0

Expect growth inhigh nickel-content

6x vs. 2020

 Aim to establish position
as a cathode supplier.

0.0

2020

2030

Change and Innovation ～ with the Power of Chemistry ～■ Invest in calcination validationequipment Build validation equipment at Ehime Works tovalidate technology in our proprietary cathodemanufacturing process Highly productive calcination

process
 Analysis/Evaluation
technology
 Our proprietary recycling
technology selected for GI
fund this April

 Automotive precursor

manufacturing technology
 Expertise with mass
production
 Better leverage empiricalknowledge by introducing
DX

71

04

Battery Materials:
Future Business Development

Mid- to long-term initiatives to grow the business further

CathodesSeparators
Plan to increase production capacity
capacity as customer demand grows
202X
projection

Our production capacity

Add capacity at SSLM
(South Korea) in linewith customer demand2017

1 billion m2 +Out to 2024

Deployment

2024 projection

600

2021

million m2

400 million m2

180 million m2

Change and Innovation ～ with the Power of Chemistry ～ Verify competitiveness of our
proprietary process Track record mass-producing calcination
products as a cathode materials suplier

Introduce mass
production equipment
 Study business strategy with ourproprietary process

Partnerships with
Other Companies

Cutting-edge
technology

location Advanced liquid LiB (low-Co/Co-free)design technology
 Direct recycling Solid-state batteries72

04

Super Engineering Plastics(LCP)

Businessstrategy

Improve production infrastructure to support strong demand and expand sales to
EV applications• Launch additional plant. Expand compounding plant in line with demand.
• Expand sales of connectors for automotive and high-speed telecommunications

Shift to EV drives increase in the number of parts related to automotive
connectors and EV motors

XEV

Number of parts

Shift to EV leads to reduction in thenumber of engine parts. Total part
count decreases by 10,000.
Meanwhile, the number ofelectronic components increases
Electronic
components+2,000 parts

IC engine

XEV

Change and Innovation ～ with the Power of Chemistry ～

Motor



Electronics
control unit

Structural parts
Market PotentialMarket Needs

Connector

Our Strengths•

IC engine

SC has beendeveloping since 2000
Compatibility of our existing
technologies

As demand for EV motors and coils
surges, there is growing demand forpart productivity gains through heatplasticization

•
•
•
•

Polymer structure with superb heat
resistance and liquidity
Compound design technology
Part design support (molding support,etc.)
Track record of stability in supply andquality
IATF16949 certified73

04

Expand Sales of SEP (LCP) in 5G
Applications
Characteristics of 5G

Ultra highspeed

Multiple
Simultaneousconnections

Ultra
short lagToward 5G ramp up

Change and Innovation ～ with the Power of Chemistry ～Technology that does not degrade signals
or telecommunications

Low transmission loss

Dielectric material properties

Intensify developmentof high-frequency
materials

FR-4(epoxy)Dielectric tangent

Accelerate development tocapture growing demand Better dielectric properties
by rigid polymer design
 Well-balance of process
ability & physical properties
by compound formulation

Technology needed

LCP

Polyimide resin

Fluorine-based
resins
Where development
will be needed

Sumitomo
Chemical LCP

BT resin

Modified polyimide(MPI)

Relative dielectric constant74

04

For Future Business Expansion (LCP)

LCP Market Estimate
Unit: 10,000 tons

 Focus on expanding sales and shifting tohigher value-added in growth areas suchas automotive and 5G
 Take share by adding production capacity

Add more
capacity
Acquire share in
growth areas

8.0

Our Future Goals

Expand sales in growth areasand high value-added products
Our FY 24 revenues:
About 1.4X FY 21

4.0
Our sales
volumes ingrowth areas

2023

Market
Scale
0.0

2021
2021

2024

Change and Innovation ～ with the Power of Chemistry ～2030

Lead market in both
quality and quantity

2030

Further increase inproduction capacity
Begin operations at
added capacity

Decided to increase
production capacity

Add 30%

about 9,000 t* Based on neat resin. Varies depending on grade mix.

75

04

Resorcinol and Inorganic Materials
Alumina and HPA

Resorcinol
Business Environment• Global demand expected to growmoderately mainly for tires• Market prices softening as new Chinesemakers emerge and followers resume
operations

Expand sales of ultrafine
particle alumina NXA

Stable supply

Expand sales ingrowth areas

Strengthen into
stable base of
earnings

Change and Innovation ～ with the Power of Chemistry ～Business Environment• Growing demand for semiconductors• Demand growing for thermally conductive
fillers mainly in automotive as electronic
components get smaller and more
powerful

Maintain tradeterms andconditions□ Succeeded in developing world's first
0.1μｍ-diameter α alumina particles□ Fine and uniform particle array□ Smooth launch of mass production
equipment□ Launch into market in FY 202276

04

Launch New Product (High-Purity Alumina)

Our High Purity Alumina Lineup
Large

NXA Series

Applications

Ceramics, Abrasives, Fillers,
Lithium-ion secondary batteries (LIB)

AKP-700,AKP-53,AKP-50

Specific surface area

0.2μm

To meet wide-range needs of diverse products

Sapphire ingredient,
Catalyst carrier, Spacer

AKP-20,AKP-30,AKP-3000
AA-03
AA-05

AKQ Series

AKP-15,AA-07

AA-1.5
AA-3
Resin fillers,Specialfluorescentmaterial

AA-5
AA-10
AA-18

Thermalspraying

Small
Small
Change and Innovation ～ with the Power of Chemistry ～Particle size

Resin fillers,
Sapphire ingredient

AKX Series
Large
77

04

Next-Generation Business Development(Solid-state Batteries) Through collaboration with Kyoto University since 2020, lead compounds were identified, which havebeen confirmed to have the equivalent capacity compared to the high-performance liquid LiB.
 Our development of materials will be completed by the end of 2023 as planned.
 Energy density of 500Wh/kg (2x vs. current liquid LIB) will be achieved by the end of FY 2024 by
the optimization of cell design of solid battery system.
One halide electrode showshigh ion conductivity close
to liquid electrode at RT
25℃

σ (S/cm)
σ (S/cm)

-2
-2
1010

liquid electrode

Solid-state battery using
halide electrode showshigh capacity.

Our newly developed Single-IonConducting polymer swollen with ionicliquid balances processability, flame
retardancy, and ion conductivity.
Anion fixed to polymer
chain by covalent bond

-3
-3
10
10

One halide
electrode
Li2.89In0.91Zr0.096Cl6

-4
-4
1010

10-5

σ25℃ = 1.8 mS/cm

2.5

3
3.5
1000/T (1/K)

Change and Innovation ～ with the Power of Chemistry ～478

Next-generation business development(cathode direct recycling)

04

CathodesDirect recycling

Recycling technology that regenerates cathodes collected from usedlithium ion batteries without returning it to metal

Vs. conventional way

Process
simplification

Reduced CO2 emissions

DirectRecyclingHigh metal
recovery rate

Development
process

Lower
cost

Less energy

Achieve recycling technology withless environmental impact

 Work together with JERA todevelop and deploy into society.

Non-roasting
methodDirect recycling process
Used
CathodesUsedbattery

Regenerated
cathodesCo, Ni, Mn

Conventional
process

Usedbattery

Roast

Change and Innovation ～ with the Power of Chemistry ～Mechanicalseparation

Black mass

Metal
extraction

Metalrefining

Precursor
synthesis

Cathodesynthesis

Regenerated
cathodes79

Cautionary Statement
Statements made in this document with respect to Sumitomo Chemical’s current plans,estimates, strategies and beliefs that are not historical facts are forward-looking
statements about the future performance of Sumitomo Chemical. These statements
are based on management’s assumptions and beliefs in light of the information
currently available to it, and involve risks and uncertainties.
The important factors that could cause actual results to differ materially from those
discussed in the forward-looking statements include, but are not limited to, general
economic conditions in Sumitomo Chemical’s markets; demand for, and competitive
pricing pressure on, Sumitomo Chemical’s products in the marketplace; Sumitomo
Chemical’s ability to continue to win acceptance for its products in these highly
competitive markets; and movements of currency exchange rates.