Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask
technologies and solutions, celebrates the grand opening of two new
manufacturing facilities in China to engage in research and
development, manufacture and sale of photomasks, becoming a
critical local supplier to the China integrated circuit (IC) and
flat panel display (FPD) industries. Formal grand opening
ceremonies will be held on April 23 in Xiamen, China and April 25
in Hefei, China.
“I am extremely pleased to celebrate this
milestone, opening two new state-of-the-art facilities in China to
support our customers’ operations with locally sourced photomasks,”
said Peter Kirlin, chief executive officer. “A tremendous amount of
hard work and dedication have contributed to this achievement. The
teams in Xiamen and Hefei have gone above and beyond, ensuring that
we reach this goal. In addition, the support we have received from
local authorities and investment agreement partners has been
remarkable. We are proud to play a part in the development of these
industries in China, and look forward to future growth
opportunities. With the opening of these facilities, which are
among the most advanced sites in our global network, we are the
well on our way to extending our leadership position in the
merchant mask market.”
IC Facility in Xiamen
The new manufacturing facility in Xiamen, China
is the result of a $160 million investment agreement with The
Administrative Committee of Xiamen Torch Hi-Tech Industrial
Development Zone (Xiamen Torch), a national-level hi-tech zone in
China, announced in August 2016. The facility will support
semiconductor manufacturing for a wide range of technologies and
nodes in both logic and memory. Plans are for initial production to
ramp quickly at 40nm and 28nm nodes, with process introduction
leading to 14nm and beyond nodes shortly thereafter. The facility,
Photronics DNP Mask Corporation Xiamen (PDMCX), is part of a joint
venture between Photronics and Dai Nippon Printing Co., Ltd. (DNP)
(Tokyo Stock Exchange:7912). This JV is modeled after the
successful relationship between the same partners that was formed
in Taiwan in 2014. Through this partnership, customers benefit from
the combined experience and resources that each parent company
brings to the entity.
The location in Xiamen was selected due to the
established technology park, close proximity to a large customer,
and the existing supply chain infrastructure. A commitment by this
large customer will enable the Xiamen facility to run at revenue
levels that will produce at least break even profitability.
Additional business, including other long-term purchase agreements,
will push the factory further into profitability. When fully
ramped, the facility will employ approximately 170 people,
including a combination of manufacturing, engineering, sales,
facilities, finance, and other support functions.
The China IC industry is expected to grow,
spurred on by a growing economy and the “Made in China 2025”
initiative. According to this state-led industrial policy, China is
targeting 40% self-sufficiency in semiconductor manufacturing by
the year 2020. Investments needed to achieve these targets should
increase the local demand for photomasks. PDMCX, with its advanced
manufacturing capability, is well positioned to satisfy this
demand. Limited production is scheduled to begin in its fiscal
third quarter on certain hybrid processes, with full production
commencing when customer qualifications are complete.
FPD Facility in Hefei
The facility in Hefei is wholly owned and
focused on the FPD industry. Created under a $160 million
investment agreement formed in August 2017 with the Hefei State
High-tech Industry Development Zone (High-tech Zone), a
national-level high-tech zone in China, to establish a
manufacturing facility in Hefei, China, the factory is equipped to
support Generation 10.5+ (G10.5+) substrate production. With this
investment, Photronics is the first producer of G10.5+ photomasks
in China, with more capacity than any other competitor. The
cleanroom is fully automated, and the facility will employ
approximately 70 people in manufacturing and supporting
functions.
Panel producers in China are moving to adopt
G10.5+ substrates for the manufacture of ultra-large screen TV
panels. This form factor provides superior efficiency for 65” and
75” panels when compared with Generation 7.5 and Generation 8.5
substrates. China is already the largest producer of LCD panels and
TVs, and their market share is expected to increase as more G10.5+
capacity comes online. In conjunction with the investment
agreement, Photronics has obtained customer commitments from two of
the largest domestic display manufacturers in China, which should
help quickly fill the planned production capacity of the facility
and enable profitability soon after startup. Earlier this month,
Photronics shipped its first G10.5+ photomask to one of these
customers.
In addition to G10-5+, China is investing more
aggressively in AMOLED technology. Today, China represents
approximately 10% of AMOLED capacity. By 2023, this is projected to
grow to nearly 40%. Including the new facility in Hefei, Photronics
now has three operations in Asia dedicated to the production of FPD
photomasks. With this collective presence, Photronics is able to
meet all technical requirements to enable panel producers to design
and manufacture high-end AMOLED displays for mobile and all other
applications. Photronics has long been seen as a technology leader
within the PFD photomask sector; the new facility in Hefei
reinforces this leadership position.
China Expansion Strengthens Leadership
Position
Kirlin concluded, “With our operating presence
in China, and the additional capacity and capability it brings, we
are in an even stronger competitive position. Our IC facility, in
combination with our JV partner DNP, is capable of delivering masks
for all high-end and mainstream applications. For FPD, we are the
clear technology leader and are well positioned to grow with the
G10.5+ and AMOLED panel production expansion. Our market position
and anticipated revenue growth, along with investment incentives
provided by Xiamen Torch and Hefei High-tech Zone, should enable us
to deliver exceptional value to all stakeholders, including
customers, suppliers, employees, partners, and shareholders.”
About Photronics
Photronics is a leading worldwide manufacturer
of integrated circuit (IC) and flat panel display (FPD) photomasks.
High precision quartz plates that contain microscopic images of
electronic circuits, photomasks are a key element in the IC and FPD
manufacturing process. Founded in 1969, Photronics has been a
trusted photomask supplier for 50 years. Today, the company employs
1,575 across 11 strategically located manufacturing facilities in
Asia, Europe, and North America. Additional information on the
Company can be accessed at www.photronics.com.
The Private Securities Litigation Reform Act of
1995 provides a “safe harbor” for forward-looking statements made
by or on behalf of the company and its subsidiaries. The
forward-looking statements contained in this press release involve
risks and uncertainties that may affect the company’s operations,
markets, products, services, prices, and other factors. These risks
and uncertainties include, but are not limited to, economic,
competitive, legal, governmental, political, and technological
factors as well as decisions we may make in the future regarding
our business, capital structure and other matters. These
forward-looking statements generally can be identified by phrases
such as “believes”, “expects”, “anticipates”, “plans”, “projects”,
and similar expressions. There is no assurance that the
company’s expectations will be realized. For additional information
please see the company’s quarterly and annual reports filed with
the Securities and Exchange Commission.
For Further Information:R. Troy
Dewar, CFAVice President, Investor Relations(203)
740-5610tdewar@photronics.com
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