OSAKA -- Japan's Daikin Industries will invest 100 billion yen ($896 million) to double its output of fluoropolymers, a material used in semiconductor production equipment, in anticipation of chip demand growing with the spread of 5G communication.
Daikin will spend the money over four years through March 2023, in the company's biggest capital expenditure for fluorochemicals. Spending hovered around 10 billion yen for each of the past few years, with a focus on updating existing equipment.
Half of the capital will go toward building a second fluoropolymer plant near existing facilities in the Chinese city of Changshu. The second plant originally was scheduled to open in 2023, but mass production will be pushed up by a year.
The remaining 50 billion yen will be used to expand capacity in Japan and the U.S. as well as manufacture new products. Some of these funds also will go toward an automotive research and development hub in Europe.
Daikin sees the global market for semiconductors remaining stagnant until summer, due largely to China's economic slowdown. But semiconductor growth will be sustainable in the medium to long term for 5G, as well as for data centers, autonomous driving and other automotive applications, the company predicts.
Fluoropolymers command a global market of roughly 800 billion yen. The material also is used for making batteries, consumer electronics and heat-resistant hoses for automobiles. Because of the strong alkaline and acidic chemicals employed to produce semiconductors, equipment in this area requires highly durable components made from fluoropolymers.
The Japanese company, known primarily for its air conditioning equipment, formed its fluorochemical business to make refrigerant gases. The segment also produces plastics and rubber.
Daikin aims to earn sales of 250 billion yen from fluorochemicals in fiscal 2020, up 37% from fiscal 2017. For fluoropolymers, Daikin faces only a few major rivals such as 3M and Chemours in the U.S. and AGC in Japan.