Electronic Chemicals Market

Electronic Chemicals Market

The global electronic chemicals market is forecast to expand at a CAGR of 6.2% and thereby increase from a value of US$6.5 Bn in 2023, to US$10 Bn by the end of 2030.

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Market Introduction and Definition

Sensor technologies play a major role in the ability of the Internet of Things to collect data from the physical environment. Sensors that allow devices to detect and react to changes in their surroundings are made using electronic chemicals. The interconnectivity of IoT devices requires advanced electronic components, including connectors and communication modules. Electronic chemicals are crucial in fabricating these components, ensuring reliable and efficient connectivity. Embedded systems are frequently used in smart devices, particularly those in IoT applications. The creation of microprocessors, microcontrollers, and other embedded parts necessary for the operation of smart devices depends on electronic chemicals.

Developing printed and flexible electronics is essential to creating lightweight, pliable Internet of Things devices. Innovative and small-sized smart devices are made possible by developing flexible circuitry, sensors, and displays made possible by electronic chemicals. Batteries or energy-harvesting technologies power many IoT devices. Electronic chemicals manufacture batteries, supercapacitors, and other energy storage solutions that support the prolonged operation of smart devices.

The production of miniaturized components for the wearable technology industry, which includes fitness trackers, smartwatches, and health monitoring devices, relies on electronic chemicals. These parts enhance the performance and functionality of wearable Internet of Things devices. IoT devices frequently need intricate, small PCBs to hold a variety of components. Creating sophisticated printed circuit boards (PCBs) that enable the integration of sensors, processors, and communication modules requires using electronic chemicals.

Specialized electronic components are needed for IoT devices with wireless communication capabilities like Bluetooth, RFID, and Wi-Fi. Electronic chemicals are used to manufacture RF filters, antennas, and other parts necessary for wireless communication. Integrating IoT capabilities into mainstream consumer electronics, such as smart TVs, home appliances, and entertainment systems, drives the demand for electronic chemicals in manufacturing these connected devices.

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Market Growth Drivers

Rising Demand for Semiconductors

Electronic chemicals are essential in various stages of semiconductor manufacturing, including wafer fabrication, deposition, etching, and cleaning processes. The growing demand for semiconductors directly translates into increased demand for these chemicals. The semiconductor industry continually evolves with advancements such as smaller transistor sizes, 3D packaging, and new materials. These innovations often require the development of new electronic chemicals, driving research and development activities in the market.

The proliferation of consumer electronics, such as smartphones, tablets, and smart appliances, contributes to the increasing demand for semiconductors. This surge in consumer electronics production fuels the need for electronic chemicals used in semiconductor manufacturing. The automotive industry's increasing reliance on electronics, including advanced driver-assistance systems (ADAS) and electric vehicles, increases semiconductor demand. Electronic chemicals play a crucial role in manufacturing semiconductors used in automotive applications.

In addition, the expansion of the Internet of Things (IoT) and connected devices relies heavily on semiconductor components. As the number of IoT devices increases, so does the demand for semiconductors and electronic chemicals. The rollout and adoption of 5G technology require advanced semiconductor components for telecommunications infrastructure and mobile devices. This represents a significant growth driver for electronic chemicals used in 5G-related semiconductor manufacturing.

The development and integration of AI technologies in various applications, including data centres and edge devices, contribute to the growing demand for high-performance semiconductors, thereby driving the need for electronic chemicals. The healthcare industry's increasing use of electronic devices, from medical imaging equipment to wearable health monitors, contributes to the demand for specialized semiconductors and electronic chemicals.

Which Factors Might Affect Market Performance?

High R&D Costs

The electronic chemicals industry involves complex and specialized research to develop new materials and processes. The high costs associated with these R&D activities can place a financial burden on companies, particularly smaller firms with limited resources. High R&D costs can exert pressure on profit margins.

Companies need help balancing innovation with the imperative to maintain competitive pricing in a market where customers often seek cost-effective solutions. Larger companies with substantial financial resources may be better equipped to absorb high R&D costs. This can create a competitive disadvantage for smaller companies needing help to allocate significant funds to R&D activities.

Price Volatility of Raw Materials

Fluctuations in the prices of raw materials introduce uncertainty into the cost structure of electronic chemicals manufacturing. This uncertainty can make it challenging for companies to forecast and manage production costs accurately. Electronic chemical manufacturers may face challenges maintaining consistent profit margins when raw material prices experience sudden and significant changes. Rapid increases in raw material costs can squeeze profit margins.

Supply chain disruptions often accompany price volatility. Sudden changes in raw material prices may lead to shortages or delays in the availability of key inputs, disrupting manufacturing processes. The volatility of raw material prices can make it difficult for electronic chemical manufacturers to negotiate stable pricing agreements with suppliers. This can lead to challenges in maintaining long-term partnerships and planning.

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Opportunities

Rising Green and Sustainable Solutions

The electronics sector is driven to adopt more environmentally friendly practices by strict rules and guidelines. The demand for environmentally friendly alternatives is driven by the need for manufacturers of electronic chemicals to develop sustainable solutions to comply with these laws. Electronics manufacturing traditionally involves using various chemicals that can have environmental impacts. Green and sustainable electronic chemicals use eco-friendly materials and processes to minimize the industry's environmental footprint. Consumers are increasingly aware of the environmental impact of electronic devices.

Many consumers prefer products manufactured using sustainable practices, prompting electronics manufacturers to seek electronic chemicals that align with these consumer preferences. Green electronic chemicals often contribute to the development of energy-efficient electronic devices. Manufacturers are increasingly focused on creating products that consume less energy and utilize resources more efficiently, driving the adoption of sustainable electronic chemicals.

Moreover, the concept of a circular economy, which promotes the reuse and recycling of materials, is gaining traction. Sustainable electronic chemicals support circular economy initiatives by being more easily recyclable and less environmentally harmful. Research and development efforts are directed toward finding sustainable alternatives to traditional electronic chemicals. This includes bio-based materials, environmentally friendly solvents, and other innovations that reduce the environmental impact of manufacturing processes.

Many electronics companies are incorporating sustainability into their CSR initiatives. This includes commitments to using sustainable electronic chemicals in their manufacturing processes, contributing to the overall growth of the green and sustainable segment of the market.

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Analyst’s Viewpoint

The electronic chemicals market will continue to grow and innovate in the coming years. The market is expected to advance due to the growing need for electronic components across several industries and the widespread use of electronic gadgets. The need for specialized electronic chemicals is predicted to increase as new technologies like 5G, IoT, and AI become more prevalent. Furthermore, focusing on environmentally friendly and sustainable solutions will change the industry and push research and development toward more environmentally friendly options.

It is anticipated that international alliances and collaborations will be essential to accelerate technological developments. Market participants are expected to improve product efficiency, ensure strict laws are followed, and adjust to changing consumer tastes as the industry changes. The market for electronic chemicals is expected to grow steadily due to technological advancements, environmental awareness, and the constantly changing field of electronic applications.

Supply-side Dynamics

China is the world's largest producer of electronic chemicals, accounting for over 50% of global production. The country has a long history of chemical production and a strong manufacturing base. The Chinese government has also supported the development of the electronic chemicals industry, providing subsidies and tax incentives. The major electronic chemicals produced in China include photoresists, etchants, cleaners, and solvents. These chemicals manufacture semiconductors, printed circuit boards (PCBs), and other electronic components.

With 15% of the world's production, Japan is the second-biggest manufacturer of electronic chemicals. The nation enjoys a solid reputation for quality and innovation in the chemical industry. Japanese businesses are renowned for their capacity to create high-performance electronic compounds that satisfy the demanding specifications of the electronics sector. The major electronic chemicals produced in Japan include resists, etchants, and polishing slurries. These chemicals manufacture semiconductors, liquid crystal displays (LCDs), and other electronic components.

Additionally, China is the world's largest consumer of electronic chemicals, accounting for almost 30% of global use. The country uses a lot of electronic chemicals, such as etchants, resists, and cleaners, because it is home to the largest electronics manufacturing industry in the world. The United States is the second-largest consumer of electronic chemicals, accounting for around 20% of global consumption.

Market Segmentation

Which is the Prominent Product Type Category?

Wet Chemicals Category in the Bandwagon

The product type segment is segmented into electronic gases, CMP slurries and pads, photoresists, wet chemicals, speciality gases, and other. The wet chemical segment is expected to dominate the market. The demand for semiconductors and electronic components directly impacts the demand for wet chemicals. As the production volume of semiconductors increases to meet the growing demand for electronic devices, the consumption of wet chemicals also rises.

The photoresist segment of the electronic chemicals market is expanding at the quickest rate. The growing demand for high-performance computing applications, including data centres and artificial intelligence (AI), requires semiconductor devices with advanced features. Photoresists are essential for achieving the precision needed in these applications.

What Application Area will Lead the Market in Long Term?

Semiconductor & IC Category Tops the List of Application Areas

The application segment is bifurcated into semiconductor & IC, printed circuit boards (PCB), and photovoltaic (PV). The semiconductor & IC market segment is the largest for electronic chemicals. The demand for consumer electronics such as laptops, tablets, smartphones, and other gadgets is rising, which supports the expansion of the semiconductor and IC market. This subsequently drives the need for electronic chemicals utilized in manufacturing processes.

Nevertheless, the market segment exhibiting the most rapid growth is photovoltaic (PV). The demand for specialized electronic chemicals is driven by continuous improvements in solar cell technologies, including developing new materials and cells with improved efficiency. These substances are essential to the methods used to produce sophisticated solar cells.

Which is the Leading End-use Sector?

Consumer Electronics Industry Records Substantial Consumption of Electronic Chemicals for Memory Devices

The end-use segment is sub-segmented into consumer electronics, computers & office equipment, communication, industrial electronics, automotive electronics, and aerospace & defense. The consumer electronics category is anticipated to lead the electronic chemicals market. The production of memory devices such as Dynamic Random-Access Memory (DRAM), and NAND Flash involves intricate manufacturing processes.

Electronic chemicals are crucial in the fabrication and quality control of these memory components. On the contrary, automotive electronics is the market segment with the most rapid growth. Modern vehicles incorporate numerous electronic control units (ECUs) to manage various functions, including engine control, safety systems, and infotainment. Electronic chemicals are used in the fabrication of semiconductor components within ECUs.

Top Regional Markets

Exploding Sales of Consumer Electronics

Asia Pacific, particularly countries like China, Japan, South Korea, and Taiwan, serves as a major hub for electronics manufacturing. The region's dominance in consumer electronics produces a substantial demand for electronic chemicals used in manufacturing processes. The Asia Pacific region is a key contributor to the global production of smartphones and wearables.

Electronic chemicals are integral to manufacturing components such as semiconductors, displays, and batteries, supporting the growth of these markets. The demand for laptops, tablets, and other computing devices has grown significantly in Asia Pacific. Electronic chemicals are essential in fabricating these devices' semiconductors, circuit boards, and other components.

Asia Pacific is central in producing smart TVs and advanced display technologies. The manufacturing processes of LCDs, OLEDs, and other display technologies involve using electronic chemicals for cleaning, coating, and patterning.

Europe Expects Large Gains from Growing Expanse of Smart Manufacturing and Industry 4.0

The integration of cutting-edge technology, such as 5G, AI, and IoT is encouraged by Industry 4.0. This increases the need for specialized electronic chemicals in Europe and spurs the development of innovative semiconductor production methods. The proliferation of IoT devices and sensor technologies is a key component of Industry 4.0.

Electronic chemicals are essential in fabricating sensors, actuators, and other components that enable the connectivity and intelligence required in smart manufacturing environments. Smart manufacturing relies heavily on embedded systems and sophisticated printed circuit boards (PCBs). Electronic chemicals are integral to the manufacturing processes of these electronic components, supporting the development of intelligent and interconnected systems.

Competitive Intelligence and Business Strategy

Prominent organizations, including Microelectronics Corporation, and Tokyo Ohka Kogyo Co., Ltd. are at the vanguard of this sector; MCC is committed to innovation, investing heavily in research and development to create new and improved electronic chemicals. The company's products are used in various applications, including the manufacture of semiconductors, printed circuit boards (PCBs), and other electronic components.

MCC is also developing new products for emerging applications, such as the Internet of Things (IoT) and wearable electronics. Microelectronics Corporation prioritizes understanding and catering to the specific needs of its customers. They actively engage with customers through market research, feedback mechanisms, and industry events to gather insights and tailor their products accordingly. This customer-centric approach has helped them gain a loyal customer base and establish a strong reputation for responsiveness and innovation.

Tokyo differentiates itself from its competitors by developing high-value-added products that meet the stringent requirements of the electronics industry. The company's products are known for their high quality, performance, and reliability. Tokyo also invests heavily in research and development to stay ahead of the curve and meet the evolving needs of its customers.

Tokyo is committed to expanding its global presence, focusing strongly on emerging markets. The company has a growing presence in China, India, and other emerging markets, where demand for electronic chemicals is growing rapidly. Tokyo is also expanding its distribution network to reach more customers worldwide.

Key Company Developments

New Product Launch

In July 2020, Linde started the first nitrogen generator, and a new air separation unit (ASU) to supply industrial gases with ultra-high purity to its Taiwanese electronics clients. The project is supposed to help Tainan Science Park expand its wafer production capabilities in Taiwan. The combined gas capacity of the ASU, the nitrogen generator, and the two future generators will be 173,000 Nm3/hr.

Market Impact: Linde's new air separation unit (ASU) and nitrogen generator plant in Taiwan are expected to significantly impact the region's industrial gas market. The plant will be able to produce 173,000 Nm3/hr of ultra-high purity (UHP) nitrogen, which is essential for producing semiconductors. This will help to meet the growing demand for semiconductors in Taiwan, which is a major centre for the semiconductor industry. The plant is also expected to impact the local economy positively. It will create new jobs and boost tax revenue. Additionally, the plant will help to reduce Taiwan's reliance on imported UHP nitrogen.

(Source: Linde Engineering India)

Entegris acquired CMC Materials in July 2022. Thanks to the purchase of CMC Materials, Entegris now offers the most extensive portfolio in the industry, along with improved operating capabilities, for applications in the semiconductor ecosystem and fab environment. With this enlarged offering, Entegris's unit-driven revenue rises from 70% to roughly 80%, as does its content per wafer opportunity.

Market Impact: The acquisition will make Entegris the largest provider of electronic chemicals and materials, significantly increasing its market share and making it the go-to supplier for semiconductor manufacturers worldwide. Entegris's expanded portfolio of products and services will help reduce the cost of semiconductor manufacturing and make it easier for manufacturers to develop new and innovative products. This will benefit the entire semiconductor ecosystem and help drive innovation and growth throughout the industry.

(Source: Entegris)

Electronic Chemicals Market Report Scope

Electronic Chemicals Market Research Segmentation

By Product Type:

• Electronic Gases
• CMP Slurries and Pads
• Photoresists
• Wet Chemicals
• Specialty Gases
• Others

By Application:

• Semiconductor & IC
• PCB (Printed Circuit Boards)
• Photovoltaic (PV)

By End Use:

• Consumer Electronics
• Computers & Office Equipment
• Communication
• Industrial Electronics
• Automotive Electronics
• Aerospace & Defense
• Others

By Region:

• North America
• Europe
• East Asia
• South Asia & Oceania
• Latin America
• Middle East & Africa