Management Policies, Business Environment, and Issues to Address, etc.
Forward-looking statements herein are based on the Group’s judgement as of the end of fiscal year 2022 under review.
1. Basic Management Policies
Based on the management philosophy of “always aiming to become the world’s No. 1 silicon wafer manufacturer by exceeding the expectations of our customers and stockholders, by promoting the welfare of our employees, and by contributing to society,” the Group has developed advanced technological capabilities that lead the world and the ability to roll out a wide range of products in manufacturing high-quality large- to small-diameter silicon wafers used in semiconductor devices. By taking full advantage of these strengths to create a stable supply capability, the Group seeks to contribute to the advancement of society. In particular, the Group focuses on improving its technological capabilities to meet its customers’ stringent requirements for quality and cost, promoting higher precision silicon wafers to support the evolution of various types of semiconductors. Through these efforts, the Group will try to maintain and improve its position in the silicon wafer industry and contribute to developing industries and improving the quality of people’s lives by, for instance, creating innovation, building smart cities, promoting energy savings and clean energy, and preventing global warming.
Under these basic policies, the Group is committed to further strengthening its business foundations and meeting its mandate from stakeholders, aiming for sustainable growth of its business.
2. Targeted Management Indicators and Medium- to Long-Term Management Strategies
Despite factors that could cause short-term fluctuations, the semiconductor silicon wafer market is expected to grow with the semiconductor market’s growth on the back of technological innovation, such as an increase in data communication volume, wide use of 5G smartphones, spread of HEVs and EVs, progress in driverless driving, adoption of teleworking, and digital transformation (DX). In particular, 300 mm leading-edge semiconductor silicon wafers, in which the Group has strengths, have been enjoying stable growth in demand at high levels, and the demand is expected to continue to increase. Meanwhile, 200 mm silicon wafers are projected to continue enjoying a solid demand, mainly for automotive and power semiconductors. In this business environment, the Group will promote further differentiation of its mainstay 300 mm wafers through technology development and investments designed to meet the increasingly tough requirements its customers have for higher precision and better quality products along with advances in scaling technology. To respond to the demand that exceeds production capacity, the Group will use its capital expenditures in a disciplined manner, giving all due consideration to their economic rationality. As for wafers of 200 mm or below, the Group will continue ensuring that its production capability is commensurate with the market environment. In addition, the Group will enhance cost competitiveness and seek differentiation through the concentration of management resources in the areas that are projected to experience future demand growth, such as an increase in communication data volume, progress in driverless driving, and digital transformation (DX).
Given that semiconductor silicon wafers are part of business areas with a volatile market environment, the Group will continue making efforts to improve profitability and work on building business foundations that can promptly and effectively respond to changes in the demand environment.
The Group also addresses priority issues for solving social problems and improving its corporate value. For instance, the Company has been working to achieve reduction targets for its carbon dioxide emissions, energy consumption, chemical substance consumption, industrial waste, and water consumption. It has also actively recruited people with disabilities. Going forward, the Company will further accelerate activities to achieve its medium- and long-term goals, such as carbon neutrality and promoting women in the workplace.
3. Business Environment and Issues to Address
The market for 300 mm semiconductor silicon wafers is currently facing an adjustment phase, especially for wafers used in memories. Only minor adjustment is expected for silicon wafers used in MPU semiconductors, although there will be varying demand for them among our customers. Meanwhile, semiconductor silicon wafers for automotive and industrial applications are enjoying a solid demand, resulting in an adequate supply-demand balance for 300 mm silicon wafers as a whole. A solid demand also continues for 200 mm silicon wafers for automotive and industrial applications, although inventory adjustment is taking place for some product types. Overall, the semiconductor silicon wafer market is projected to expand in the medium- and long-term, although some products are currently facing an adjustment phase depending on customers and product types.
Under these circumstances, the SUMCO Group will maintain large market shares in leading-edge products through technological development to deliver product differentiation and meet customer needs for higher precision products to continue realizing the SUMCO Vision. At the same time, the Group will endeavor to improve its earnings through enhancement to its cost competitiveness achieved by productivity improvement with AI. The Group will also closely monitor the market environment and endeavor to minimize risks amid concerns over the impacts of geopolitical risks, which have been increasing in recent years, monetary policies adopted by national governments, and other factors.
The Group is undertaking an ongoing, gradual production capacity enhancement in line with the market growth. It will steadily make capital investments of ¥228.7 billion, approved in September 2021, toward their completion in December 2024. The Group will fulfill its responsibility as a supplier and use its capital expenditures in a disciplined and appropriate manner, considering matters such as the supply and demand forecast of the silicon wafer market at different times and the time required to install or increase production facilities.
In October 2022, the Company decided to acquire the semiconductor polycrystalline silicon business from Mitsubishi Materials Corporation. This business acquisition will contribute to the stable procurement of semiconductor polycrystalline silicon and trichlorosilane, essential materials for the Company’s silicon wafer business, and enable the Company to promote seamless development and manufacturing from materials to end-products. The Company will endeavor to further raise its corporate value through the smooth execution of this business acquisition. The business acquisition is scheduled to take place on March 31, 2023.
The Group identifies as materiality the issues it should address as a matter of priority for solving social problems and raising its corporate value and works on sustainability initiatives. Furthermore, the Group will further accelerate activities to achieve its medium- and long-term goals, such as carbon neutrality and promoting women in the workplace.