Arch to Sell off Electronics Unit

ELECTRONIC CHEMICALS

Arch Chemicals has agreed to sell its microelectronic materials business to Japan's Fuji Photo Film, becoming the second specialty chemical company, along with Clariant, to exit the electronics field this year.<p>The sale, for about $160 million, includes plants and R&D facilities in North America, Europe, and Asia and Arch's 49% interest in the FujiFilm Arch joint venture. The business supplies photoresists, polyimides, thin films, and other products to semiconductor and flat-panel-display makers worldwide. It had sales last year of about $135 million and earnings before interest and taxes of $1.9 million.

Arch is keeping its 50% interest in Planar Solutions, a joint venture with Wacker Chemie that makes chemical mechanical planarization slurries used to smooth semiconductor wafers. Planar had sales of almost $23 million last year. Arch will separately try to sell its chemical management services business, which had sales last year of about $10 million.

Arch CEO Michael E. Campbell says the sale will allow the company to focus on its main business in treatment products for cosmetics, water, wood, and coatings. Arch exited another electronics segment, high-purity chemicals for semiconductor wafer cleaning, in 2000.

Robert N. Castellano, president of The Information Network, an electronics industry consulting firm, points out that Arch is getting out of a fast-growing but competitive business in which suppliers are under constant pressure from much larger electronics companies. "The technological demands placed on companies require a lot of capital investment at a time when semiconductor manufacturers keep beating them down on price," he says. Clariant cited high capital expenditures when it announced its decision to exit electronic materials last year.

Castellano adds that Fuji Photo's existing infrastructure is better suited to support the Asian customers who increasingly dominate the electronics industry.