Electronic Materials Business Briefing - Ajinomoto

1 Electronic Materials Business BriefingJune 12, 2019 TadahikoYokota, President, Ajinomoto Fine-Techno Co., 2019 Ajinomoto Co., Inc. All rights Overview of Ajinomoto Fine-Techno Co., Development of Ajinomoto Build-up Film (ABF)III. Electronic Materials Business UpdateCopyright 2019 Ajinomoto Co., Inc. All rights Overview of Ajinomoto Fine-Techno Co., Materials DivisionActivated Carbon DivisionABFA dhesivesDispersing agentsOne-component epoxy resin curing agentsFlame retardantsFounded: September 1942 Common stock: 315millionEmployees: 295 (as of April 1, 2019)Activated carbonAdsorption resinElectronic Materials DivisionCopyright 2019 Ajinomoto Co., Inc.

2 All rights Overview of Ajinomoto Fine-Techno Co., Development of Ajinomoto Build-up Film (ABF)III. Electronic Materials Business UpdateCopyright 2019 Ajinomoto Co., Inc. All rights Origin of Electronic Materials BusinessSoybeansWheatGlutamateMSGS ynthesized MSG Effective utilization of intermediateIntermediateExtraction (pre-warto early post-war) Synthesis (1960s) Fermentation (today)Epoxy resincuring agentSaltChlorineCaustic sodaChlorinated paraffinLed to current Electronic Materials businessCopyright 2019 Ajinomoto Co., Inc. All rights Origin of Electronic Materials BusinessInterlayer insulating material for semiconductor packaging has its origins in technology used to develop epoxy resin curing agentEpoxy resincuring agent 1999: Advent of Ajinomoto Build-up Film (ABF), an interlayer insulating material for semiconductor packaging1950sR&D on MSGsynthesisMSGI ntermediateRaw materials1960sSemiconductorpackagePrint Circuit Board (PCB)Semiconductor package cross-sectionCopyright 2019 Ajinomoto Co.

3 , Inc. All rights Background of ABF s DevelopmentTwo major turning points in latter half of 1990s: Ceramic Plastic Wire bonding Flip chip connectionEnabled higher-density interconnects, higher-speed signal transmission, and lighter-weight substrates, setting the stage for mass proliferation of high-performance was strong demand from the semiconductor industry for semiconductor packaging substrates composed of an insulating material that: (1)can easily form insulation layers of uniform thickness(2) is highly heat resistant, flame retardant, and mechanically strong when cured, (3) enables copper microcircuits to be fabricatedatop insulation layers, and, (4) has a high degree of both insulation reliability and temperature cycle 2019 Ajinomoto Co.

4 , Inc. All rights Semiconductor production process in latter half of 1990s: Interlayer insulator ink used as build-up materialDryFlip over, coat reverse sideProne to residual air bubblesPoor surface planaritySolvent odorThese shortcomings were all rectified by ABFC opyright 2019 Ajinomoto Co., Inc. All rights ABF facilitates copper interconnect fabrication through platingPlating can be applied to ABF by roughing its surface (copper interconnect fabrication through plating).Roughing treatment (oxidant)ABFC opper platingCross-section viewABF layer Copper plating layerCopyright 2019 Ajinomoto Co., Inc. All rights New printed circuit board manufacturing methodBuild-up methodA method of manufacturing multilayer printed circuit boards by sequentially adding laminate layers, laser drilling to make viasin them, fabricating interconnects, of ABF enables forming fine copper pattern and, in turn, smaller devicesABFCuL/S=10/10 umCu Laser viasCore materialBuild-up layerBuild-up layerThrough-holes Copyright 2019 Ajinomoto Co.

5 , Inc. All rights ABF s distinguishing attributesSince its launch, ABF has continuously been usedby major semiconductor makers as a certified material World s first film produced from liquid resin Easier to use than liquid Materials Manufactured through low-waste, environment-friendly processWith our approach, we closely collaborate with customers from the product development stage onward after first ascertaining their true 2019 Ajinomoto Co., Inc. All rights Value chainChemical makersAjinomoto GroupSuppliers related to circuit makers Chemicals Equipment(pre-processing, laminating, drilling, plating, etc.)Circuit makersCPU makersPC makersConsumersFilm converters(outsourced coating process)ABFL ogistics companies(outsourced low-temperature distribution)R&DPurchasingVarnish productionSalesTechnical supportVarnishCustomersAsset-light model based on outsourcing of coating and logisticsCopyright 2019 Ajinomoto Co.

6 , Inc. All rights ABF manufacturing sitesVarnish productionCoating companyLogistics companyCoating contractor (Niigata Prefecture) Ajinomoto Fine-Techno (Gunma Prefecture)Coating contractor (Gunma Prefecture)F-LINE CorporationAjinomoto Fine-Techno(HQ)Gunma Plant*Increased productioncapacity*Risk diversificationCopyright 2019 Ajinomoto Co., Inc. All rights Overview of Ajinomoto Fine-Techno Co., Development of Ajinomoto Build-up Film (ABF)III. Electronic Materials Business UpdateCopyright 2019 Ajinomoto Co., Inc. All rights Semiconductor market environment11 Market s long-term growth trend projected to continue<Logic IC product market forecast> Source: Ajinomoto Fine-TechnoServer CPUs/GPUs and ASICs*/FPGAs** for network applications will drive market growth going forwardABFN etworksServersASICs,FPGAsCPUs, GPUsLogic ICs100105 112 111 112 125 134 139 20122013201420152016201720182019 Rebased to 2012 = 100*ASIC: Application-specific integrated circuit**FPGA: Field-programmable gate arrayCopyright 2019 Ajinomoto Co.

7 , Inc. All rights ABF sales Growth period Temporary lull New growth period2008-12: Advent of smartphones &tablets PC market stagnation Global financial crisis<Sales>Ratio by use2019 vs. 2013 Sales rebased to 2000 = 100 New growth phase driven by expansion to non-PC applicationsPCsOther applications (Forecast)1999 Birth of Ajinomoto Build-up Film2000to 2007 Internet popularization Rapid growth due to increasing PC demandFrom 2013 Expand into domains adjacent to the PC domain for new Business growthDrastic reduction in the PC area, with growth in other areas (servers, telecommunications, etc.)Based on Ajinomoto Co. researchNew growth periodTemporary lullGrowth periodCopyright 2019 Ajinomoto Co.

8 , Inc. All rights (Forecast)PCsServersASICsGame consolesOthersIII-3: Expansion of other applications13 Detailed breakdown of Ratio by use 2013 vs. 2019 Growth in sales for server and communication applications in conjunction with advent of 5G02468101214161820201620172018201920202 0212022202320242025 Forecast number of data center servers (mnunits)2017-22 services market expansion is driving: Steady growth in number of installed data center servers Growth in communication infrastructure Source: Ajinomoto Fine-TechnoUse of ABF for high-frequency applications LaunchingtomarketofABFabletoachievelowdi electrictangent Developingnewmaterialsabletomeetcustomer s needsCopyright 2019 Ajinomoto Co.

9 , Inc. All rights Business network expansionSpace for collaboration on valuecreationwith customersAFT Future Creation Centerestablished in 2016 Facility for envisioningand co-creating the future with customersAccess to globally leading-edge informationNorth America activity hub AFT-USAestablished in Silicon Valley in 2015 Taiwan/China activity hubsTaisoCommerce Inc. established in Taipei in 1988 Ajinomoto Shanghai Specialty Chemicals Co. Ltd. established in Shanghai in 2018 Copyright 2019 Ajinomoto Co., Inc. All rights reserved.