Semiconductor Instruments & Systems

Note: For the fiscal year ended December 31, 2006, the accounting term for the Company was 9 months and 11 days as a result of a change in its fiscal year-end from March 20 to December 31.

The semiconductor industry is cyclical but continues to grow. HORIBA's principal products are mass flow controllers - devices that control gas and liquid flows in the semiconductor manufacturing process, and monitoring equipment for those processes. HORIBA responds to technical advances in miniaturization and yield enhancement, with new high-tech solutions for our customers.

The semiconductor related industry is affected by market conditions and is distinctively cyclical. Nevertheless, it has grown by about 10% per annum on average. HORIBA's Semiconductor Instruments & Systems segment has experienced a 13% annual growth over the past five years, exceeding the market growth rate, thanks to an increase in its market share in Asia. Moreover, our profitability has significantly improved since the fiscal year ended March 2002, when we recorded a loss. As part of the measures undertaken during this period, our mainstay mass flow controllers have been digitalized while the number of models has been cut from several thousand to several dozen. We made tremendous efforts to pare costs by producing a smaller number of models in higher volume and to improve sales efficiency. As a result, we have lowered the breakeven point and become more resilient to market fluctuations. In October 2005, the Aso Factory in Kumamoto Prefecture enlarged its facility and added capacity. These changes now enable the factory to smoothly respond to a rise in sales volume. By correctly timing peak demand in the semiconductor market, the segment has experienced a significant sales expansion.

In recent years, semiconductor manufacturing processes have been advancing at an accelerated pace to achieve further miniaturization in processing and enhance yields. Cutting-edge technologies to keep up with this evolution are needed. This market trend is favorable for HORIBA's mass flow controllers, which have a competitive edge in performance, backed up by high-precision gas flow control technology. This has also provided an opportunity to raise our market share, which is approximately 36% at present. Capitalizing on our strength as a maker of analytical and measurement equipment, we have been developing and selling monitoring systems and quality testing systems used in the semiconductor manufacturing process. We have essentially become one of a few select companies that can provide total solutions for semiconductor manufacturing processes from various angles. In July 2007, the HORIBA Technology Center was founded in Silicon Valley, California in the U.S., the heart of the semiconductor industry. Our goal is to ensure new product development based on closer contact with our customers and to shorten development by Japanese and U.S. engineers, who are using their respective strengths in close collaboration. We regard the Center as a strategic base that will support timely product development.

The segment now has flexibility and speed to adjust to changes as its target, the semiconductor industry, is extremely cyclical. The market adjustment know-how of this segment can be adapted by other business segments, thus contributing to the "multiplication" of values.

Control of gas flows and monitoring of cleaning fluid concentrations in semiconductor manufacturing processes, semiconductor and LCD quality control inspections

Semiconductor production equipment manufacturers, semiconductor device makers, semiconductor cleaning equipment manufacturers

Massflow controllers, chemical concentration monitors, thin-film analyzers for semiconductors and LCD inspection, reticle/mask particle detection systems, residual gas analyzers, vacuum meters.

Products overview

Significant demand fluctuation caused by the "silicon cycle" in the semiconductor industry