Newly Integrated Company “Resonac” to Start on Jan.1, 2023

September 29, 2022

Showa Denko K.K.

Showa Denko K.K. (SDK) (Tokyo: 4004) announces its integration with Showa Denko Materials Co., Ltd. (SDMC) effective on January 1, 2023 to establish "Resonac," following approval at today's extraordinary general meetings of shareholders. SDK will become a holding company "Resonac Holdings Corporation," and SDMC will change into an operating company "Resonac Corporation." The Showa Denko Group positions the launch of the newly integrated company as "the second inauguration," aiming to become a world-leading chemical company with advanced functional materials through further transformation efforts.

Newly Integrated Company "Resonac"

Since acquiring former Hitachi Chemical Company, Ltd. and making it a subsidiary (present SDMC) in 2020, SDK has taken steps toprepare for integration. SDK and SDMC integrated their management systems in January 2022. After integration, the new company's net sales will amount to approx. 1.3 trillion (based on account settlements for 2021), of which approx. 400 billion will come from sales of semiconductor and electronic materials. In particular, the new company will have an overwhelmingly large share in the world market for "back-end process," which is now drawing attention as the miniaturization of semiconductors seems to be approaching its limit.

SDK has businesses that produce stable earnings, such as petrochemicals, graphite electrodes, and functional materials. Meanwhile, SDMC is strong in businesses with growth potential, such as semiconductor materials and mobility. Through the integration of the two companies, we will aim at further growth by investing earnings from stable businesses into growth businesses.

Synergy from Integration

In addition to the expansion of business domains, the integration is unique in that it is a combination of a midstream company SDK and a downstream company SDMC, which is close to the market. This means that "the voice of the market" obtained by SDMC will be conveyed to SDK and used in its development of materials. At the same time, we will promote digital transformation using SDK's expertise in computational science, and strengthen our intellectual property strategy through the combination of the two companies' patents. Thus, further synergy will trigger innovation, and create new values for the market.

Ideal State of the Newly Integrated Company

The Newly Integrated Company will put special emphasis on the semiconductor and electronic materials business. We have a large scale and high profitability in this business, recording net sales of 391.8 billion in 2021. This business scale is far larger than that of other semiconductor material producers. We have world-leading market shares in many areas of semiconductor materials, including high-purity gases, CMP slurries, copper-clad laminate boards and photosensitive films. We are also continuing to record high growth in our SiC epitaxial wafers for next-generation power devices, which are attracting attention as "green semiconductors." We will continue to make steady investments in the semiconductor and electronic materials business, realizing growth higher than the market average and driving the entire Group's growth.

The Newly Integrated Company Resonac will aim at becoming a world-leading chemical company with advanced functional materials by maintaining the scale of net sales at a level exceeding 1 trillion while ensuring EBITDA margin of more than 20%.

About new company names

1.New company names

Showa Denko K.K., which is to become a holding company, will have a new trade name of Resonac Holdings Corporation.
Meanwhile, Showa Denko Materials Co., Ltd., which is to become an operating company, will have a new trade name of Resonac Corporation.

2.Our hope put into the name and new logo

The Newly Integrated Company Resonac defines its purpose as "Change society through the power of chemistry." To achieve technological innovation for solving various social issues, however, it is essential for us to make wide-ranging co-creative efforts with partners. As a "Co-creative Chemical Company," Resonac will aim at ensuring sustainable growth and enhancing enterprise value through such co-creative efforts.

The name "Resonac" was created as a combination of the word "Resonate" and "C" as the first letter of "Chemistry." We put into this name our hope that the Group's wide-ranging and flexible advanced material technologies will be connected and resonate with our partners' various technologies and ideas to realize bright future, and the resonance will spread further to meet new partners, thereby creating a powerful surge that changes society.