With a range of electronic products being made in India today, the demand for the chemicals and materials used in making them is on the rise. However, while there are
a lot of opportunities for this industry, there are quite a few challenges too.
By Sudeshna Das, director, ComConnect Consulting
A wide range of highly sophisticated chemicals and materials—solid, liquid and gaseous—is used at different stages of electronic components’ and products’ manufacturing, starting from semiconductor and printed circuit board (PCB) fabrication to flat-panel displays, various stages of cleaning, chip packaging and product insulation. It follows that the demand for these chemicals and materials will increase with the growth in electronics manufacturing.
This report highlights the key demand and supply drivers, as well as challenges faced by companies in this sector.
The increase in demand for electronic chemicals is related to the overall growth in the production of electronic devices, as well as innovations in technology. According to BCC Research, the global market for electronic chemicals is expected to reach US$ 30.5 billion by 2020, growing annually at 5.9 per cent from 2016 to 2020. Wafer fabrication segment had the highest revenue share in 2016 and is expected to maintain its lead throughout this period. Silicon wafers are the most common type of wafer fabrication materials used globally.
The same report states that the global demand for electronic chemicals and materials has increased owing to technology advancements and the increase in demand from applications like photovoltaics, integrated circuits, as well as PCBs for mobiles, laptops, computers, tablets, LED bulbs and others. Other factors driving market growth globally include strict environmental regulations, increasing consumption of IC process chemicals, and rapid economic growth in emerging countries. The Indian market may be a significant contributor to this growth, considering resurgence of the Indian electronics manufacturing industry.
Fifty per cent of the survey participants forecast that the Indian market for chemicals and materials used in electronics manufacturing will grow at a rate of up to 20 per cent. Twenty per cent of the survey participants predicted a higher growth rate between 20 and 30 per cent. The remaining 20 per cent expected an even more accelerated growth of over 30 per cent.
The materials used in electronics manufacturing are well-known high-purity chemicals such as photoresists, wet chemicals, acids, gases and solvents, as well as wafers and laminates.
Based on the types of products, the market can be divided into eight segments: silicon wafers, PCB laminates, photoresists, specialty gases, CMP slurries, wet chemicals, Low-K dielectrics and others (refer to the table).
As stated earlier, silicon wafers constitute the major chunk of the global electronic chemicals and materials market, and are widely used as base materials in semiconductors’ manufacturing. PCB laminates are widely used for PCB manufacturing. Low-K dielectrics are relatively recent applications of semiconductors and ICs, and therefore are expected to grow aggressively in the next five years across the globe.
The Indian market for electronic chemicals and materials does not follow global trends. It is expected to be primarily driven by the demand for wet chemicals and PCB laminates. Environmentally-safe products will also be in demand. Survey participants predict a huge demand for wet chemicals. According to them, future growth will predominantly come from the following top three demand generating categories (Fig. 3):
1. Wet chemicals
2. PCB laminates
3. Silicone chemicals
Moreover, there is a demand for plain PET and PP films, liquid and powder epoxy, TPCS and TCA wire.
In India, the demand for electronic chemicals and materials is primarily met through higher imports in the absence of significant local production. Seventy per cent of survey participants cited demand-supply gap on account of inadequate local production (Fig. 4). Value addition by local manufacturers is quite limited, as most high-value and critical materials are still imported.
Sixty per cent of survey participants mentioned that imports are the main source of electronic chemicals and materials used in India. However, 20 per cent of the participants felt local production is adequate to meet the demand, while 10 per cent said that demand is met by both local production and imports (Fig. 5).
The local production ecosystem for electronic chemicals and materials is still not mature enough. Therefore, currently, local sourcing is primarily limited to:
2. Basic-level PCB cleaning and coating solutions
3. Solder pastes
Silicone chemicals are imported in bulk. Advanced conformal coatings are also imported as these are not manufactured locally. According to survey participants, there is a huge gap between demand and local supply in this category, and cost-effectiveness plays a big role in the market. Chinese and Korean products have captured a big market share. PCB chemicals and fluxes are also imported, as no manufacturing is done in the country.
Polymers gaining importance
The electronics industry is undergoing rapid transformation. The high-paced adoption of smart devices and gadgets among millennials has warranted manufacturers to look at materials with utmost seriousness. Currently, the biggest trends in electronic gadgets are ‘design for freedom’ and a new look and feel. Gadgets have become thinner and smaller, and are now fused with properties that increase their lifecycle/shelf-life.
Properties like high flowability, stiffness, good cosmetics, easy processing, flame retardancy and dimensional stability are in demand. According to industry experts, polymer composites can achieve unmatched levels of performance in strength, flexibility and aesthetic freedom. Thus, polymers provide limitless possibilities for industrial research, design and development in the electronics industry.
The electronics industry is using tailored polycarbonate-based polymer products that offer the strength of conventional materials at half the weight. This, in turn, facilitates innovative manufacturing techniques that allow ‘design for freedom’ without increasing the cost. One such example is notebooks and tablets, which use polycarbonate composites to achieve amazing reductions in the manufacturing process and weight, bringing benefits of resource savings as well as convenience.
The Indian market is characterised by the presence of several well-established global, regional and local suppliers. Competition in the market is expected to intensify due to the expansion of product portfolios and technological advances. Considering the growing importance of this market, a few global players have already set up production units in the country. This is expected to bridge the demand-supply gap to a certain extent.
Given the huge domestic demand for electronic components and products, development of the electronic chemicals and materials industry will also help the entire electronics manufacturing ecosystem to achieve long-term sustainable growth in line with Make in India initiative. To develop a strong components industry, we first need to have a local ecosystem for raw materials.