IT-related
Chemicals

Ⅳ Masaki Matsui

Representative Director &Managing Executive Officer1

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
2

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
3Ⅳ-1 Business Overview: Our Major Products
End Market

Our Customers

Our Products

Touchscreen panels

Displays

Cover window films

LCD panels
Polarizing films

OLED panels

Polymer lightemitting materials

Semi-conductors

Compoundsemiconductor
epiwafers

Color resists

Photoresists

Processing chemicals

Developing business primarily in both display-related materials and semiconductor materials

IR Day: IT-related Chemicals

4

Business Overview:
Ⅳ-1
Manufacturing and Sales Locations

Building a business network centered in East Asia, an area witha high concentration of display-related and semiconductor industries
IR Day: IT-related Chemicals

5

Business Overview:
Ⅳ-1
Display-related Materials Business
Interface between people and ICT technology
 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

LCD Panel
Polarizing film

OLED Panel
Display cover materials
Cover glass
Cover window film

Glass substrate
Color filter layer
Color resist
Liquid crystal layer
TFT layer
Aluminum targets
Processing
chemicals
Polarizing film
Backlight(Note): Sumitomo Chemical’s products

IR Day: IT-related Chemicals

Circularly polarizing film
Liquid crystal-coatedpolarizer/
Liquid crystal-coatedretardation film
Touchscreen panel
OLED layer
Thin film encapsulation
Polymer light-emitting materials /Small-molecule light-emitting
materials and others
Barrier layer / Polyimide substrate6

Ⅳ-1 Business Overview: Semiconductor Materials
Infrastructure supporting modern society withultra-microfabrication technology1Contribute to the continuous evolution of microfabrication technology withsuper high-quality chemicals

Wafer cleaning

2 Metal-Film deposition

3

Processing chemicals

Exposure

Our products

Photoresists
Photoresists

Metal thin film

Silicon wafer

4

Resist coating

5 Development

6

Etching89Drying

Photomask

7

Resist stripping

Cleaning
Processing chemicals

IR Day: IT-related Chemicals

Processing chemicals

7

Business Overview:
Ⅳ-1
Compound Semiconductor Materials
Key technologies for Society 5.0

High
Power
generation/transmission

Silicon carbide

Maglev
Shinkansen
Train

SiC

Consumerelectronics

Silicon

Data centers

AC/DC
adapters

Wireless charging

OutputElectric
vehicles Contribute to the creation of a more advanced society by supporting
technologies such as high-speed broadband communications, energy
saving, and autonomous driving (sensing)

Gallium nitride(SiC substrate)

GaN on SiC

Mobilecommunicationbase stations

Gallium nitride(GaN substrate)

GaN on GaN

Si

Smartphones

Gallium arsenide

Operating frequency

Low

Power devices
IR Day: IT-related Chemicals

GaAs

High
Radio frequency devices

8

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
9Business Strategy for FY2019-FY2021:
Ⅳ-2
Further Improvement of Our Business Portfolio
Action Plan

Major Issues


Display-relatedMaterials

Semiconductor
Materials

Maximize profit byrestructuring & focusing onhigh value-added products

Secure growing demand by
utilizing advance investment

Diversify product portfolio

Next-generation
Businesses

New products by increasing
the sophistication ofcore in-house technology
Approaches to adjacentmarkets based on
open innovation methods

IR Day: IT-related Chemicals



Restructuring
Polarizing films for LCD- Optimization of global supply chain
Focusing on highProducts for smartphones
value-added products- Secure a share of the high-end
market by utilizing core materials developed in-house
Focusing onhigh value-added
products

Touchscreen panels- Diversify product portfolioEnhance systems of production,
development and evaluation for photoresists



Invest in processing chemicals in ChinaNew processing chemicals orcompound semiconductors for power devices etc.

Products for image sensors andnext-generation displays etc.

Products developed by utilizing technologies fromtouchscreen panels and compound semiconductors etc.

10ⅣIT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets30
11Ⅳ-3 Financial Statements(100 millions of yen)(100 millions of yen)

4,500

350

4,000

300

3,500

250

3,000

200

2,500

150

2,000

100

1,500

50

1,000

0

500

▲50

0

▲100

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Net Sales/Sales Revenue (Left Axis)(Forecast)

Operating Income/Core Operating Income (Right Axis)

IR Day: IT-related Chemicals

12

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
13Ⅳ-4 Market Environment: Display-related Materials
Market assumptions
for FY2019-FY2021

New
factors

Current situation

accelerates(Korean panel
manufacturers withdraw
or downsize LCD-TV
business)

MarketReorganization• Mobile Displays:
Number of smartphones remains
almost the same, units with OLED
display increase(27% in 2018 -> 48% in 2021)

COVID-19

 Increase in OLED units

48

200

44

2019

2020
forecast

LCD-TV units (Left-axis)
OLED-TV units (Left-axis)
Average display size (Right-axis)

IR Day: IT-related Chemicals

ModerateーModerate

SlightSmartphone Market (Source: Gfk)

220

2018

SlightCOVID-19specialdemandslows down
(40% in 2021)

52

2017

2021

(especially in high-end)

240

2016

2020

 Market stagnates

TV Market (Source : Gfk)

180

2019

 Market shift to China• TV Displays:
Number of TV sets remains
almost the same, TV display size
continues to get larger (Growth
rate: YoY+4%)(Millionunits)

Impact on our business (est.)

40

2021
(inch)
forecast

1,500

45%

1,200

40%

900

35%

600

30%

300

25%

0
(Millionunits)

2016

2017

2018

2019

2020
forecast

2021
forecast

20%

LCD smartphone units (Left-axis)
OLED smartphone units (Left-axis)
OLED smartphone ratio (Right-axis)

14Ⅳ-4 Market Environment: Display-related Materials
Large LCD panel supply capacity(Source: Mizuho Securities, Sumitomo Chemical)

25,000 Global supply capacity of large LCD

panels is concentrating in China

 Market reorganization is going on within

20,000China (Consolidating to 2 major Chinese
panel manufacturers)

15,00010,0005,000
0(km2/Month)

2018

2019

2020

Korean Manufacturers
Chinese Manufacturer
Taiwanese Manufacturers

2021

Balance of supply/demand for mobile OLED panels(Source: Omdia, DSCC)

1,500

Suppliers of LCD-related materials will be
faced with fiercer competition

 Active investment by

Chinese panel manufacturers

 Slower growth of the end market of

OLED smartphones than expected

1,000
500
0

(Million units)

2018

SupplyDemand2019

SupplyDemandDemand for OLEDs
Chinese Manufacturers

IR Day: IT-related Chemicals

2020

SupplyDemand2021

SupplyDemandKorean Manufacturers
OthersDemand for differentiation to provide
additional value becomes stronger
due to the expanding supply/demand gap
15

Ⅳ-4 Market Environment: Display-related Materials
Now
Conventional
LCDs

QD* sheet

Conventional LCD + QD* sheet->Improved color reproduction

Color filter
Liquid crystal cell
QD* sheet
Backlight

LCD
Mini-LEDs

Organic LED

Mini-LED
Backlight

PrintedOLEDs
QD* OLEDs
Blue OLEDQD* color conversion layer

QD* electroluminecense layer

Inorganic LED

Self-luminous display

Conventional
OLEDs

Replace backlight with mini-LEDs->Improved local contrast

Color filter
Liquid crystal cell

* QD: Quantum dot

Micro-LED

QD*
displays

Micro-LEDs（TV）

The increasing sophistication of LCDs and the development ofnext generation self-luminous displays are progressing in parallel
IR Day: IT-related Chemicals

16

Ⅳ-4 Market Environment: Semiconductor Materials
Market assumptions
for FY2019-FY2021

New
factors

Current situation
• Steady market growthaccompanying digitaltransformation(Growth rate: +4%/year)

COVID-19


US-China
trade war

2019

2020

2021

Demand stays firm on
the whole, although somecategories are affected by
COVID-19ー

SlightSlightDemand for cutting-edge
products is very strong, andsupply/demand balance istight

SlightSlightSlightSemiconductor Market(Source: WSTS)

5,000

Compound Average
Growth Rate
(CAGR)

4,000
3,000
2,000
1,000
0

(100 mil.

Impact on our business (est.)

CY2014

CY2015

CY2016

CY2017

CY2018CY2019CY2020CY2021(Forecast)(Forecast)(Forecast)Analog

Micro

Logic

USD)

Discrete

Optoelectronics

IR Day: IT-related Chemicals

Sensors

Memory

8%

Logic

3%

Total
Semiconductor

4%

Memory17

Ⅳ-4 Market Environment: Semiconductor Materials
2017
DRAM
line-width
generation

1X

Logic
line-width
generation

10nm

2018

2019

2020

1Y
7nm /
7nm+

2021

1Z

2022

1b

1a

5nm

2023

3nm

Immersion ArF photoresists

Applicable
photoresists

EUV photoresists

Number of
NAND
Layers48 layers

Applicable
Photoresists

KrF

Rewiring
technology

Wire bonding
Flip-chip bonding

64 layers

Applicable
photoresists

92 layers

128 layers≧192 layers

KrF thick film photoresists
FOWLP (*1)

FOPLP (*2)

I-line thick film photoresists*1 Fan Out Wafer Level Package*2 Fan Out Panel Level Package

Line-width shrinking and multilayer structures are required to achieve
semiconductor performance improvement
IR Day: IT-related Chemicals

18

Ⅳ

IT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
19

Ⅳ-5

Progress on Major Issues:

Expand Product Portfolio & Develop New Businesses
Expand existing businesses
Increased sophistication of in-house core technologies andmultifunctional materials, fusion of display-related andsemiconductor materials technologies

Existing businesses
Display-related Materials

Semiconductor Materials

Develop new businesses
Collaboration and investment in business fields where we expect synergy
IR Day: IT-related Chemicals

20

Progress on Major Issues:
Ⅳ-5
Display-related Materials for OLED Displays
Major Issue

Progress

Action Plan

☑ Full-fledged mass-production of Secure a share of

Focusing onhigh value-added
products

polarizing film with in-house LC*
coating retardation for OLED
smartphones has started

the high-end market byutilizing core materials
developed in-house Expand touchscreen panel

product portfolio

See “Progress on Major Issues:
New products” section

 Develop products forflexible displays

Element technology

Polarizer
Retardation film

2018

2019

2020

2021

Stretched PVA
LC* coating (In-house)
LC* coating (Procurement)
LC* coating (In-house)* LC: Liquid crystal

Continue to secure high market share with a wide-lineup of polarizing
film materials for OLED displays
IR Day: IT-related Chemicals

21

Progress on Major Issues:
Ⅳ-5
Display-related Materials for LCDs
Major Issue

Action Plan

Market shift to
China Design polarizing films to meet

Restructuring Optimize

Focusing on
high-end LCDs

the requirement of Chinese panel
manufacturers

Progress☑ Lower shrinkage stress &improved permeability of polarizing film withacrylic protective film

☑ Optimization of product allocation of

our global supply chain

polarizing film for LCD-TVs has madesome progress Secure market share in☑ "Roll to Panel" lines for extra-large sized

extra-large sized TVs and PIDs*(polarizing film)

 Achieve wide color gamut &high color reproduction(color-resists)

Polarizing film production
sites
China
Korea
(Wuxi)

Japan

panels have been installed in customer
factories☑ Development of new color materials for high-end LCD-TVs (8K, Mini-LED etc.) has started* Public Information Displays

Focus our resources effectively on
promising fields (ex. next-generation
displays) while keeping some profit inconventional business fields

TaiwanIR Day: IT-related Chemicals

22

Progress on Major Issues:
Ⅳ-5
Semiconductor Materials
Major Issue
Securegrowingdemand byutilizing
advanceinvestment

Action Plan Expand production capacity for

immersion ArF photoresists

 Enhance the development andevaluation system of photoresists for
cutting-edge processes

 Invest in a processing chemical plantin China

Diversify
product
portfolio
Semiconductor Material
Production Sites

China(Xi’an,Changzhou)

 Expand sales of EUV photoresists
 Develop compound semiconductors

for power devices

Progress☑ Full-fledged operation has

started from the JulySeptember quarter of 2020

☑ Plan to start in the April-

September period of 2022

☑ Operating stably

See “Progress on Major
Issues: New products"
sectionKorea

IR Day: IT-related Chemicals

Japan

Secure market share by providing highperformance and high-quality chemicals
needed for enhancing the density ofsemiconductors (line-width shrinkage
and multilayer structures)

23

Progress on Major Issues:
Ⅳ-5
New Products (Foldable Display Materials)
Market for foldable display smartphones(Source: Omdia)

50 (Million units)

2.5%

40

2.0%

30

1.5%

20

1.0%

10

0.5%

0

2019

2020

2021

2022

2023

2024

 Our position• Have a wide-lineup of
foldable display materials• Have advantages in optimization of
product properties by utilizingorganic synthesis technology

0.0%

Foldable display smartphone units (Left-axis)
Foldable display smartphone ratio (Right-axis)

Foldable display materials

Display covermaterials
Polarizing film
Touchscreen
panel (TSP)
OLED Panel

Our products

Competitor

Clear resin film

Ultra thin glass

LC-coatedpolarizer/
retardation film

Stretched/coatedPVA polarizer

Flexible TSP(Add-on)On-cell TSP(Manufactured bypanel mfr. in-house)

IR Day: IT-related Chemicals

ActionPlan☑ Propose materials that meetthe requirement of panel/device
manufacturers☑ All products already have beenlaunched separately

Progress ☑ Prepare to launch

multi-functional materials in
2021

Secure market share in
foldable display materials
24Progress on Major Issues:
Ⅳ-5
New Products (5G Antenna on Display)
Comparison with existing technology
Existing product(Antenna in Package)

Our product indevelopment(Antenna on Display) Position of our technology•

For millimeter wave bands•

Making the most of touchscreen panel
technologies and production lines

ActionPlan

Progress
AoD
AIP

AIP

IR Day: IT-related Chemicals

AIP☑ Promote improved 5G communication
performance in combination withexisting technology☑ Develop new applications for whichthin, transparent and flexible
properties are suitable☑ Performance test using AoD antenna
modules is on going

AIP

Smooth commercialization by
utilizing our existing resources25

Progress on Major Issues:
Ⅳ-5
New Products (Polymer Light-emitting Materials)
Target markets for printed OLEDs
ppi
500
Definition300• Have light-emitting material technologies
for all RGB colors

Automotive
MonitorVacuumdeposition
OLEDs

 Our position• Already achieved mass-production of
mid-sized printed OLED panels before
competitors

TV

Printed OLEDs

200

Smartphone
AR/VR

100
5

10

30
Panel size

Action
Plan
100
inch

50

Comparison of luminescence mechanismwith existing OLED-TV panels
Use colorfilters

RGB light-emission -> Color mixing >White light -> Reproducing RGB
light through color filter

Bottom emission

IR Day: IT-related Chemicals

No color
filters

High utilizationof light

Top emission☑ Improve the lifetime ofblue light-emitting material☑ Performance tests on OLED
Progresspanels with new promisingmaterials are planned to start

Improve performance further
for mass-production of
TV panels
Introduce customers to thebest conditions to maximize
light-emitting performance26

Progress on Major Issues:
Ⅳ-5
New Products (EUV Resists)
EUV photoresist market (quantity)(Source: Fuji Keizai)(k gallon/year)80 Our position• Have the top market share (over 30%) in
immersion ArF photoresists, but slightly
lagging behind in EUV• Started sales in FY2020

60
40

ActionPlan

20
0

CY2018 CY2019 CY2020 CY2021 CY2022 CY2023 CY2024

Line-width Generation for EUV Resists
2018
Logic

7nm+

2019

2020

2021

2022

2023

DRAM

1Z

IR Day: IT-related Chemicals

1a

2024
2nm

3nm

5nm

Progress

1b

1c☑ Develop a composition that canachieve higher resolution to
expand sales☑ Found the optimum composition in
short time by utilizing
Materials Informatics☑ Obtained good evaluations in acompetition for mass production
scheduled after FY2023

Aim for 20~30% shareas soon as possible
27

Progress on Major Issues:
Ⅳ-5
New Products (Image Sensors)
Structure of image sensors (CIS)
Incident light

Layer

Function

Micro lensLight focusing

Color filter

Color separation

PhotodiodePhotoelectric
conversion

Logic

Image processing

Technical trends in CIS
Higherdefinition
Our
products

Highersensitivity
Ourproducts

 Our position• Built up technology and know-how inboth display & semiconductor fields• Have technologies applicable forhigh definition & high sensitivity

ActionPlan• Miniaturize photodiode pixels
ArF thick film photoresists• Increase the amount of light
focused by the lens
• Use CMY color filters instead of RGB

R G B

High refractive
clear resin

IR Day: IT-related Chemicals

CM Y

CMY color
resists

Progress☑

Secure mass-production results for
new color materials☑

Propose the combination ofclear resin for lenses & photoresists forshaping micro lenses☑

New color materials:
To launch in 2021☑

Resin for lenses:
Optimizing properties for launch in 2021

Increase in sensing demand(ex. autonomous driving)-> Seize the opportunity to expand
share of image sensor market
28

Ⅳ-5

Progress on Major Issues:
New Products (Next-generation Power Semiconductors)

Comparisons of Power Semiconductors
Type

Silicon(Si)
Siliconcarbide(SiC)
Gallium
nitride(GaN on GaN)

Operating Operating
frequency
voltage

○

○

◎

○

○

◎

Size
(*1)

△
○

◎

Characteristics••

Well proven
Cost competitiveness••High operating voltage
Already in massproduction (*2)•

At the R&D stage*1 Power unit size for the same output*2 For some electric vehicles and high-speed trains

 Our position• Have manufacturing technologies forboth GaN substrates and GaN
epi-wafers

ActionPlan

Development of the GaN on GaN
Power Semiconductors Market
Characteristics(compared with Si/SiC)

 Low loss-> Energy saving
 Small-sized-> Light weight

Example uses (expected)

 Power sources fordata centers Electric vehicles
 Wireless power supplies

Need to reduce costs and develop applications
that require the characteristics of GaN on GaN
power semiconductors
IR Day: IT-related Chemicals

Progress☑ Reduce cost of GaN substrate(produce large-diameter
substrates, improve productivity)☑ Develop applications bycollaborating with other players☑ Made progress in development ofelemental technology for
manufacturing GaN substrates
suitable for power
semiconductors

Create a market for GaN on
GaN power devices andenjoy first-mover advantage
29

ⅣIT-related Chemicals

1

Business Overview

03

2

Business Strategy for
FY2019-FY2021

09

3

Financial Statements

114Market Environment

135Progress on Major Issues

196Long-term Targets

30
30

Ⅳ-6 Long-term Targets(100 Million JPY)

Further improvement ofour business portfolio

500

Focusing onhigh value-added products &Developing/launching
new businesses

400
300
200
100
0

FY2019Results

FY2020
Forecast

Display-related materials
Semiconductor materials
Others (including new products)

IR Day: IT-related Chemicals

Mid-2020s
Estimate

Materials for OLED/
next-generation displays
Materials at the boundary area
between semiconductors &displays

Materials for cutting-edge
semiconductor processes
High-performance &energy-saving compound
power semiconductors etc.

Carry out action plans in response to
LCD market changes

Aim for a core operating
income of around ¥50 billion
in the mid-2020s
31

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.

- 32 32