Showa Denko plans to shake up its corporate culture

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Showa Denko plans to shake up its corporate culture

Showa Denko K.K. Taiwan Semiconductor Manufacturing Co., a key chemicals supplier to global chipmakers, is overhauling its executive team and company culture in anticipation of an industry shift it expects to boost its business over the next decade.

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Hideki Somemiya and Tomomitsu Maoka joined in October and have already taken steps to shake up the century-old company. 53 year old Somemiya, the new chief financial officer, started offloading shares in partner companies that were held merely to maintain good relations, while 47-year-old Maoka, appointed as chief strategy officer this month, is revamping how the company communicates with and retains employees.

Both of them have a track record in the semiconductor industry: Somemiya helped Sony Group Corp. boss Kenichiro Yoshida develop recurring revenue from its chip business while Maoka helped revive the fortunes of key auto chip supplier Renesas Electronics Corp. They were handpicked by the newly appointed President Hidehito Takahashi, who is mapping out the overall strategy. Showa Denko was founded in 1908 and counts Infineon Technology AG and Toshiba Corp. among its customers, according to Bloomberg supply chain data.

The Tokyo-based company is betting that chipmakers are moving their focus from shrinking semiconductors to stacking them in layers to help it reach the prodigious growth rates of equipment-making peers like Lasertec Corp. It provides essential ingredients for the treatment and preparation of silicon wafers, which would be in growing demand once miniaturization processes are exhausted and each chip starts to consume more material.

When chipmakers start stacking up layers, demand for polishing and packaging products will surge, Somemiya said. We have previously failed to position ourselves well to profit from the value we provide, but our time to reap the fruits of our work is coming. Showa Denko positioned itself aggressively by paying more than double its own market value for the chemicals unit of Hitachi Ltd. in 2020. The $8.8 billion deal made it a key supplier of chemical mechanical planarization slurry, a liquid used to polish the surface of silicon wafers. The company launched a research and development consortium to develop next-generation 3D packaging technology last year.

The next decade will be about stacking up when it comes to the cutting edge of chipmaking, according to Ace Research Institute analyst Hideki Yasuda. Materials, such as those made by Showa Denko, will become more important and their suppliers will get a renewed look from investors. The strategies of Showa Denko are based on the assumption that the decades-long move to ever-smaller transistors will cause physical limitations that make it more economical to employ novel designs and architectures rather than chasing increasingly pricier fabrication equipment. TSMC and Intel Corp. already use layering in their designs and are expanding on that work with more 3 D stacking later this decade.

Showa Denko s management is taking steps to safeguard its intellectual property and technological advantage by increasing staff retention to capitalize on its position. As part of an effort to improve communication with employees, Maoka turned the company's typically closed-doors new-year strategy meeting into a video chat address by the CEO to its entire global workforce.

Cash cows are everywhere in the company, Maoka said. Our human resources policy has been so lax that competitors were able to steal our manufacturing secrets by hiring our engineers. None A $13 Billion Bet that Air Travel Will Soon Take Off is a No A $13 Billion Bet.

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