Why Specialty Chemical Content Per Chip Is Rising
The relationship between semiconductor manufacturing and the specialty chemicals industry has always been one of asymmetric dependency: the semiconductor industry cannot manufacture chips without specialty chemicals, and the specialty chemicals for electronics market exists entirely to serve the semiconductor and electronics industries' highly specific material requirements. What has changed over the past several years is the rate at which the chemical content per unit of semiconductor output is increasing, driven by the combination of more process steps at advanced technology nodes, the introduction of new material systems required by next-generation transistor architectures, and the growth of advanced packaging approaches that add further chemical process requirements beyond those of wafer-level fabrication. The result is a specialty chemicals for electronics market that is growing at rates consistently above those of the semiconductor market itself — an unusual dynamic in a supply relationship where volume growth typically tracks the market being served.
The fundamental driver of increasing chemical content per chip is the rising complexity of advanced semiconductor process flows. A leading-edge logic device manufactured at a two-nanometre or below process node requires hundreds of process steps, each of which may involve deposition of thin films from chemical precursors, patterning using photolithography with speciality photoresists, etching using dry or wet chemical processes, and polishing with chemical mechanical planarisation slurries. The number of process steps at the leading edge of semiconductor technology has grown substantially with each successive technology generation, and each step adds chemical material consumption even as the shrinking dimensions of the features being created require ever-higher purity and more precisely controlled chemical properties. The transition to extreme ultraviolet lithography — now required for the most critical patterning steps at leading-edge nodes — has introduced a new category of EUV-specific photoresists, pellicles, and ancillary materials whose performance requirements and value-added chemistry content are substantially higher than those of the deep ultraviolet photoresists they complement.
New Material Systems and Their Chemical Enablers
The transistor architecture transitions that the leading semiconductor companies are implementing to sustain performance improvement beyond the limits of simple dimensional scaling are introducing new material systems that in turn require new specialty chemicals for their deposition, patterning, and integration. The transition from FinFET to gate-all-around transistor architectures — adopted by Samsung in its 3nm process and planned by TSMC and Intel for their sub-3nm generations — requires selective epitaxy processes for the silicon-germanium channel materials, atomic layer deposition of high-k dielectric films with atomic-level thickness control, and selective etch chemistries with selectivity ratios that exceed those achievable with conventional etch processes. Each of these process requirements translates into demand for specialty chemical precursors, process chemistries, and cleaning solutions that are new to semiconductor manufacturing and that can be supplied by only a small number of chemical companies with the technical capabilities and materials science expertise to develop and qualify them.
The introduction of backside power delivery networks — routing the power supply connections for transistors through the back surface of the silicon wafer rather than through the front-end metallisation — creates further new chemical requirements for the wafer bonding, thinning, and backside processing steps that this architecture innovation requires. Silicon photonics — the integration of optical functions with silicon electronic circuits for high-speed data communication within and between chips — requires specialty chemicals for the deposition and patterning of the waveguide, modulator, and photodetector structures that optical interconnect functions require. Each architectural innovation adds chemical complexity and specialty chemical content, and the pipeline of architectural innovations being pursued by leading semiconductor companies ensures that this dynamic will continue to drive above-market growth in specialty chemicals for electronics through the remainder of the decade.
Advanced Packaging Chemistry: The Growth Frontier
The advanced packaging revolution — the shift toward chiplet architectures, heterogeneous integration, and three-dimensional stacking that is defining the performance frontier of semiconductor design — is creating a new front of chemical complexity and specialty chemistry demand that extends beyond the wafer fabrication processes where most semiconductor chemicals have historically been consumed. The assembly of chiplet-based packages requires underfill materials that encapsulate the solder bumps and copper pillars connecting chip to substrate, providing mechanical stability and thermal management in packages where the thermal and mechanical stresses are more severe than in conventional single-die packages. Mold compounds for the encapsulation of chip and package assemblies require precise thermal conductivity, coefficient of thermal expansion matching, and adhesion properties that are tailored to the specific package architecture and operating conditions of each application.
The dielectric materials and copper plating chemistries used in high-density interconnect substrates and advanced packaging interposers are growing market segments as the substrate complexity required to support chiplet architectures increases. The linewidths, via densities, and layer counts of advanced packaging substrates are approaching those of semiconductor wafers, bringing wafer-level process chemistry requirements into what has historically been a printed circuit board manufacturing environment. The specialty chemical suppliers serving this market convergence — Showa Denko, Atotech (now part of MKS Instruments), MacDermid Enthone, and a range of Japanese and Korean specialty chemical companies — are among the fastest-growing participants in the electronics specialty chemicals market, serving a demand that is growing as a direct consequence of the chiplet architecture transition and that will continue to grow as heterogeneous integration becomes the dominant approach for the most demanding electronic systems.
Supply Chain Concentration and Geopolitical Risk
The specialty chemicals for electronics market is characterised by a degree of supply chain concentration that creates geopolitical risk disproportionate to the market's relatively modest revenue size relative to the semiconductor industry it supplies. The leading suppliers of critical semiconductor process chemicals — photoresists from JSR, Shin-Etsu Chemical, and Tokyo Ohka Kogyo; CMP slurries from Entegris, CMC Materials, and Fujimi; and high-purity process gases and chemical precursors from a range of mostly Japanese and German specialty chemical companies — are concentrated in a small number of companies and geographies in ways that create single points of failure in semiconductor supply chains that the industry's semiconductor equipment and wafer supply chain has similarly been grappling with. The recognition of this concentration risk — accelerated by the COVID-19 supply chain disruptions and the US-China technology competition — is driving semiconductor manufacturers and their government backers to invest in supply chain diversification for specialty chemicals alongside the more visible investments in wafer fabrication capacity that have attracted the most policy attention and public subsidy. The specialty chemicals for electronics market will be a significant beneficiary of those supply chain diversification investments over the next five years.