Employing world-class nonferrous metal manufacturing technologies, we are a supplier of a wide variety of sputtering targets including targets for semiconductor applications, compound semiconductor materials, high-purity metals, and surface treatments. These and many other materials and services, provided on a global scale, find use cases in end products such as advanced devices, leading-edge IT equipment, medical instruments, and electric vehicles.
In the first half of fiscal 2022, semiconductor-related markets remained as robust as they had been in fiscal 2021, due to the continued strong demand for semiconductors driven by the growth in digital transformation (DX). However, in the second half of fiscal 2022, demand for consumer electronic devices in general, such as smartphones, tablets, and PCs, began to decline, which led to a marked adjustment of inventory across the supply chain.
Against this backdrop, and in anticipation of medium- to long-term market growth, we are taking steps to strengthen our supply system. These steps include starting construction of a new plant in the U.S. and the decision to increase our production capacity of sputtering targets for semiconductors in Taiwan by approximately 80% from the current level. In addition, while we continue to strengthen our ESG initiatives overall, Isohara Works can be singled out specifically for receiving a perfect 200-point score when audited under the Validated Assessment Program (VAP). This was an evaluation of the facility’s compliance with the Responsible Business Alliance (RBA) Code of Conduct and further demonstrates our commitment to the ESGs.
The adjusting of inventory levels across the supply chain, which began in the second half of fiscal 2022, is expected to continue in fiscal 2023. Furthermore, although intensifying trade friction between the U.S. and China and prolonged Russian aggression in Ukraine, amongst other factors, are raising concerns about the current macroeconomic environment, market growth is still expected in various business areas. In the medium- to long-term, growth is anticipated particularly in semiconductor-related markets due to the full-scale rollout of 5th generation (5G) mobile communication systems, electrification of vehicles, and the acceleration of decarbonization. Consequently, the demand for the division's advanced materials is expected to further increase.
To meet this growing demand, we will make sound, intelligent capital investments, which will include the construction of new plant to raise production capacity and the creation of a flexible supply system. This in turn will earn us the trust of our customers. In addition to contributing to the achievement of the SDGs through our products, we also intend to meet society’s expectations by keeping our attention on new development trends in response to various market changes and solving problems through internal and external collaboration.
At our Taiwan facility, production capacity of sputtering targets for semiconductors will be expanded, increasing capacity by approximately 80% from the current level. We will have the new line designed, built, and commissioned to begin operating in the second half of fiscal 2024 or later as needed.
Sputtering targets for semiconductors are a mainstay product of our Thin Film Materials Business. They are used in manufacturing various semiconductor devices, including leading-edge logic and memory products. Our decision to increase production capacity is in keeping with our long-term view that demand is expected to increase as the semiconductor industry expands in step with ongoing global digitalization. This expansion will lead to a supply system that can flexibly respond to customer demands and earn us their trust.
Taiwan facility earmarked for increased production capacity
