Sumitomo Chemical reinforces IT-related chemicals business
Sumitomo Chemical Company will continue to undertake a number of measures vigorously
to expand and reinforce its Liquid Crystal Display (LCD) materials business, a corebusiness within the company’s IT- related Chemicals Sector
While current demand for LCD materials has not regained its strength yet owing to weakermarket conditions, inventory adjustment, etc., significant demand growth is anticipated in
the mid to long-term, particularly for uses in wide-screen TVs. Because of such promisingprospects, the company is enhancing its efforts, as outlined below, to attain solid growth ofbusiness by increasing cost competitiveness and accelerating R&D programs as well as
strengthening customer services.
I.

Color Filters Business
1. A New Manufacturing Facility for Sumika Technology Co., Ltd. in Taiwan
In response to a strong request from one of the company’s Taiwanesecustomers, Sumika Technology, a Sumitomo Chemical’s subsidiary in Taiwan,
will build a new manufacturing facility in the existing clean room of that
customer’s plant as follows:• Location: Hsinchu Science Park
• Capacity: 50,000 sheets per month (2nd generation size)• Date of Completion: September 2005
• Investment: Approximately 5 Billion yen
At present Sumitomo’s another subsidiary in Japan, New STI Technology Co.,
Ltd., manufactures and delivers all color filter requirements of the Taiwanesecustomer from Japan. The local production in Taiwan, which does not requirelarge investment as existing facilities can be effectively utilized, will
significantly reduce overall costs and enable Sumitomo Chemical to be far
better positioned for future growth in demand. As a result of this arrangement,New STI Technology will become able to have additional capacity to meet theincreasing demand of its customers both in Japan and overseas.
2. Production Capacity Expansion at Dongwoo STI Co., Ltd. in Korea
Dongwoo STI, a Sumitomo’s subsidiary, currently operates two 5th generation
color filter plants in Korea with a combined production capacity of 120,000
sheets per month. With a small investment aimed at increasing productivity andeliminating bottlenecks, output capacity will increase to 160,000 sheets by thesummer of this year. The capacity expansion will boost cost competitivenessand allow the company to supply increasing demand from customers.

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Polarizing Film Business
Sumitomo Chemical is expanding production capacities of existing plants andreinforcing its regional business bases. Both in Korea and Taiwan, a second
plant for polarizing film raw roll production is under construction, withcompletion scheduled for March of this year. Once the new plants are broughton stream, Sumitomo Chemical’s total production capacity of raw roll films will
increase substantially from 15 million square meters to 26 million square meters
per year, making the company better able to meet the expected growth indemand for wide-screen TVs.
Moreover, in light of the rapid growth of market in China, the company isconstructing a film chip-cut processing facility in Wuxi, which is due tocomplete in July of this year. Furthermore, given the steady increase in demandalso for small and medium-sized color TVs, the company is in the process ofestablishing a new subsidiary in Hong Kong shortly as a chip-cut centre in
China’s Hua-Nan region, an area where growth in demand is particularly strong.
In addition, the following measures are being taken to accelerate R&D,
augment quality control capability, and raise cost competitiveness.
a.

Research enhancement at IT-Related Chemicals Research Laboratory
A new research laboratory is under construction in the company’s Ehime
Works (Ohe district), adjacent to the film production plant, as below.
• Date of Completion: April 2005
• Investment: 1 Billion yen
The new laboratory will integrate research teams that are presently
located in Osaka and Ehime separately. Furthermore, the number ofresearchers will be increased and research equipment reinforced toenhance the overall research capabilitiesb.

New Construction of a Quality Control Center and a Coating Plant, andIntroduction of a New Online Production Management System
Sumitomo Chemical is newly constructing a quality control center and acoating plant as well as introducing a new production management
system. These undertakings will be completed by the fall of this year,with the total investment of approximately 3 billion yen. Once all thework is finished, the company is capable of integrated production
covering all stages from raw roll material manufacture to chip-cut. Theseefforts will greatly contribute to improving customer satisfaction through2improved quality assurance, shorter delivery time, and stronger costadvantage.
The quality control center will be equipped with a brand-new clean roomand high precision product testing equipment to prevent any defective
materials or product in process from mingling into steps that follow.
Additionally, the coating process that is currently operated by Lintec
Corporation in their Shingu plant in Hyogo, Japan will be relocated to anarea adjacent to Sumitomo’s film production facility in Ehime Works toreduce production lead-time and improve quality control capabilities.
While the coating work itself will continue to be entrusted to Lintec, its
operation will be strictly controlled in accordance with Sumitomo
Chemical’s production management standard. To satisfy the standard,investments will be made to reinforce the clean room and otherinfrastructures.
The new online production management system will enable the company
to track the process from the stage of order acceptance to productshipment, and make it possible to look up immediately and at any time
the status of production, materials supply, product inventories, etc. The
new system will therefore allow for inventory reduction, shortening ofproduction lead-time, and a timely response to customer requests.
III.

A New Research Laboratory for Dongwoo Fine-Chem Co., Ltd.
A new research laboratory is under construction at Dongwoo Fine-Chem Co. inIksan, Korea.
• Date of Completion: April 2005
• I Investment: Approximately 5 Billion yen
With the new laboratory, the company will be able to strengthen its research on
materials for LCDs (color pigment resists, etchants), photoresists forsemiconductors (mainly krypton fluoride), and resists for LCDs.

Sumitomo Chemical has designated the IT-related chemicals business as one of thecompany’s three core businesses and is bolstering efforts to fortify its operational base for
future growth. The company expects that consolidated sales of the IT-related Chemicals
Sector will be185 billion yen for fiscal 2004, 230 billion yen for fiscal 2005, and 250
billion yen for fiscal 2006, the last year of its ongoing Three-Year Corporate Business Plan.

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