Avantor Bolsters Presence In Taiwan

Avantor Performance Materials held a ceremony last month to mark the opening of its technical support center in Hsinchu, Taiwan. The facility will improve the company’s position in a country that is one of the world’s top producers of semiconductors.

The technical center—employing 12 people and representing a $6 million investment—is not a major one. But over time, the firm will manufacture its products in Taiwan as well as source its raw materials locally, Jean-Marc Gilson, Avantor’s chief executive officer, said at the event. Currently, the facility features a clean room and a pilot production line that enables customers to test Avantor materials without having to idle their own equipment for that purpose.

Avantor is the new name for Mallinckrodt Baker, a 140-year-old U.S.-based supplier of ultrapure chemicals used in laboratories, in pharmaceutical production, and in the food and beverage and electronics industries. The company changed its name after it was acquired by the private equity firm New Mountain Capital last year (C&EN, June 7, 2010, page 29). With the change of ownership came an enhanced commitment to the electronic materials business.

“The acquisition by New Mountain has been a rebirth for this company,” Gilson said. “Private equity funding is allowing us to expand, and this is what we’re doing in Taiwan.”

Avantor is also considering boosting its capabilities in South Korea and China, Gilson said. The new emphasis on electronics is supported by Raj Gupta, Avantor’s executive chairman and an adviser to New Mountain. Gupta was CEO of electronic materials supplier Rohm and Haas until Dow Chemical bought it in 2009.

It’s hard to understate the central role of Taiwan in the global semiconductor industry. At present, the island converts roughly 25% of the world’s silicon wafers into chips, Gilson reckoned. Many major suppliers of electronic materials have already established a considerable presence in Taiwan, making Avantor look like a latecomer.

For example, Air Products & Chemicals manages its global electronic materials business out of Taipei. Japan’s JSR has been operating a formulation facility and lab in southern Taiwan since 2006. DuPont opened a semiconductor materials technical center in Hsinchu in 2006. Japanese photoresist manufacturer Tokyo Ohka Kogyo has long operated a plant in Miaoli, just south of Hsinchu. And last month, BASF opened a plant producing chemical mechanical planarization slurries near Taoyuan, on the northwest of the island.

Until it opened the Hsinchu center this year, Avantor supported its Taiwan customers from the U.S., Gilson explained. In the semiconductor industry, Avantor’s pure chemicals are mostly used during etching and removal of photoresists and postetch residues. When developing new manufacturing techniques, customers send their wafers to be processed by Avantor. “It would take up to one month to process a customer’s wafer in the past,” Gilson acknowledged.

Despite taking its time to establish a presence in Taiwan, Avantor will not have to face homegrown competition. Few Taiwanese companies have attempted to supply chemicals and materials to electronics manufacturers, even though the island has a well-developed chemical industry and the market for electronic materials is right there.

“Manufacturers of electronic components are conservative,” said Colley Hwang, president of DigiTimes, a Taiwan-based media group focused on the electronics industry. “They don’t really want to try out new suppliers.” Moreover, he said, Taiwanese chemical producers think in terms of producing large volumes of commodity chemicals at low cost, not crafting specialty chemicals for a handful of customers.

Over the years, Avantor has managed to hold on to key Taiwan-based customers such as Taiwan Semiconductor Manufacturing Co. Already the world’s largest contract manufacturer of semiconductors, TSMC is further strengthening its market position, making it an opportune time for Avantor to develop its Taiwan presence.

At a miniconference following the inauguration of Avantor’s new lab, Bing J. Sheu, director of R&D design and technology platform at TSMC, noted that his firm will invest more than $7 billion in its facilities in 2011, significantly more than any of its competitors. “We develop our products at TSMC in collaboration with companies like Avantor,” Sheu noted.

The capital expenditures required to remain competitive in the semiconductor business are getting so high that the number of players is dwindling, Gilson noted. At the same time, the number of companies able to supply chemicals and other raw materials to these firms is also shrinking because the materials are becoming increasingly difficult to make. With its Taiwan investment, Avantor is signaling that it intends to remain in the game.