Johnson Matthey Annual Report & Accounts 1999

The Electronic Materials Division had a difficult year due to a significant downturn in the semiconductor and microelectronics industries that it supplies and associated price pressure, mainly from the Far East, which depressed margins. As a result the division's operating profits were 45% down on last year at £22.1 million.

A cross-section showing a laser forming a via in an advanced multilayer printed circuit board manufactured using Johnson Matthey’s industry leading High Density Interconnect technology

Electronic Materials has been reorganised into two sub-divisions: Wafer Fabrication Materials, which serves the front end of the semiconductor manufacturing process, and Interconnect Products and Services, which includes the Assembly Products, Laminate Products and Semiconductor Packages businesses that service the back end of the semiconductor and microelectronics industries.

Wafer Fabrication Materials
The Wafer Fabrication Materials business (WFM) continued to expand its global operations despite difficult industry conditions throughout the year. It is well positioned for growth as market conditions improve, indeed order books began to strengthen in the final quarter. In line with its globalisation strategy WFM increased its market penetration during the year, particularly in Southeast Asia where it commissioned its most recent manufacturing operation in Taiwan. A new facility in the UK is due for completion by the late summer and the business is now strategically positioned in all the key semiconductor manufacturing regions worldwide. During the year WFM extended its product range to include high purity tantalum and cobalt and established refining facilities for high purity copper at its Spokane plant. The business has also expanded its portfolio to include chamber consumables used in the sputtering process and has demonstrated production capability for 300mm wafer processing technology. The business is well positioned to remain the world's leading supplier of thin film deposition materials to the semiconductor industry.

Interconnect Products and Services
Laminate Products Group
While Johnson Matthey Advanced Circuits, Inc. (JMACI) kept its manufacturing facilities full throughout the year, its profits were impacted by intense overseas price competition resulting from the Asian economic crisis. However the business has continued to develop leading edge technology for the telecommunications and high end computer markets with capital investment at its Buffalo and St. Louis Park facilities to prepare for volume production of new high density interconnect printed circuit boards in the Spring of 1999. JMACI is positioned for the medium term to be the only US volume manufacturer of this microvia technology which is being incorporated in the next generation of multifunction digital mobile phones and advanced networking and Internet infrastructure products.

Semiconductor Packages Group
Johnson Matthey provides intergrated materials solutions for manufacturing and packaging of semiconductor and microelectronic devices The Semiconductor Packages Group (SPG) had a good year exceeding all its volume and yield goals and making a good contribution to profits despite price pressure from Japanese competitors. SPG is working with leading telecommunication, computer, semiconductor and contract manufacturing customers on a mixture of package and advanced high layer count PCB products as the current customer and product mix is in transition. A new flip chip pre-production plant, utilising the advanced build up technology cross-licensed from Kyocera Corporation, is fully operational and is capable of producing the most technically advanced packages in the United States. Johnson Matthey remains the principal US supplier of advanced semiconductor packages and is also positioned to be the premier supplier of high end PCBs to the workstation, server, and supercomputer markets.

Assembly Products Group
Profits in the Assembly Products Group declined due to the impact on thermal management and die attach products of the economic downturn in Asia, associated price competition and design changes resulting from the rapid shift to lower cost personal computers. Electronic Materials graph These effects were partially offset by a strong second half rebound in its contract assembly business, where revenues were grown by leveraging the industry wide trend toward increased outsourcing of specific assembly operations and by establishing a significant manufacturing base at the Juarez, Mexico facility. This growth is anticipated to continue in the next year. Additional successes were seen in low alpha lead products, where Johnson Matthey is now the largest merchant supplier to the semiconductor industry, and new proprietary thermal interface materials, which are undergoing customer qualifications.

Research and Development
EMD continues to invest in leading edge materials technologies designed to establish key positions in emerging markets.

The Chippewa Falls and Minneapolis facilities have made a significant investment in ultra fine line sequential build up technologies designed to produce the next generation of printed circuit board and laminate packages for the flip chip connection of integrated circuits. This fast growing packaging technology also demands novel underfill and thermal interface materials and the division's San Diego facility has been active in generating integrated material sets for this application.

Integrated circuit manufacturing has seen a move to smaller device geometries and the emergence of new copper based thin film technologies. Johnson Matthey has established an excellent position in these areas with notable successes in the development of high density refractory targets as well as sputtering targets for the next generation of barrier and contact materials. The development of other high purity metals for future generations is also well advanced.