Dexerials - Company History

Sony Chemical was incorporated in March 1962 in Kita-Shinagawa, Tokyo, to make adhesive-coated copper foil for printed circuit boards and industrial adhesives. Its purpose was not a market but a supply chain. Japan’s electrical industry still imported most of its basic materials, and a young maker like Sony — pushing transistor radios, televisions and tape recorders into world markets — could not hold volume and quality together while depending on other people’s imports. Building the materials in-house was the precondition for the parent’s export drive, and the first customer was the parent itself.

The Haneda plant in Ota Ward started up in January 1963, and full production of circuit-board copper foil and adhesives followed in April 1964. For more than a decade the company remained an unglamorous parts supplier. What changed that was anisotropic conductive film (ACF), put into mass production in December 1977 — a conductive film that bonds a semiconductor chip to a substrate. It became the world standard for mounting LCD modules and IC drivers, and with it a subsidiary built to serve one customer began selling materials to electronics makers outside the Sony group.

In July 1987 Sony Chemical listed on the Second Section of the Tokyo Stock Exchange. Sony at the time let several subsidiaries — Sony Finance, So-net and others — hold their own access to the capital market, and the materials arm was allowed a shareholder register of its own. It kept widening its product range on that footing, starting production of secondary protection devices for lithium-ion batteries in July 1994.

That independence lasted twelve years. When Sony reworked its group structure, the listed-subsidiary policy went with it: in January 2000 Sony Chemical was delisted through a share exchange and became a wholly owned subsidiary. Twelve years public were followed by twelve years inside the parent’s capital. In those years the product base was completed — anti-reflective film (ARF) from 2002, optical elastic resin (SVR) from 2007 — and in July 2006 the company absorbed Sony Miyagi and renamed itself Sony Chemical & Information Device, folding in the information-device business.

In June 2012 a holding company called VG Chemical was formed, funded by a vehicle advised by the Development Bank of Japan and Unison Capital. It existed to receive a business Sony had decided to sell as part of its portfolio reform, and that September it acquired the entire share capital of the former Sony Chemical & Information Device. In March 2013 VG Chemical absorbed it and took the name Dexerials — a coinage from Devices, Excellence, Materials and Alliance, chosen to announce an identity as a functional-materials maker rather than a subsidiary. The first, irregular accounting period showed how thin the ground was: standalone sales of $40M (¥4bn) and an ordinary loss of $17.4M (¥2bn).

The recovery came quickly on paper. The year to March 2015 brought consolidated sales of $541.2M (¥66bn) and operating profit of $79.3M (¥10bn), and in July 2015 Dexerials relisted on the First Section of the Tokyo Stock Exchange — fifteen years after the 2000 delisting, and the fund’s planned exit. A new site was acquired at Shimotsuke in Tochigi in August 2015 and began operating in October 2016.

Then the market stalled. Ichinose Takashi, president from the 2012 carve-out until June 2019, steered the company through independence and the flotation but not past the smartphone plateau: sales of $558.1M (¥63bn) in the year to March 2017 with operating profit down to $31.2M (¥4bn), a partial rebound the next year, then $555.9M (¥61bn) and $33.9M (¥4bn) in the year to March 2019. The share price fell below net assets, and market capitalisation sank to about $385.3M (¥42bn) in March 2019. The fund had realised its return; the company had not yet proved its own worth.

Shinya Yoshihisa became president in June 2019 — the first chief executive raised inside the company rather than sent in. He reported the last year under Japanese GAAP, moved to IFRS from the year to March 2021, and made a habit of choosing products by return on invested capital and of what he called backcasting: fix the desired future state, then reason backwards to what has to be developed now. Recovering smartphone demand and rising sales of optical elastic resin and anti-reflective film did the rest. Sales reached $755.8M (¥106bn) with operating profit of $229.9M (¥32bn) in the year to March 2023 — about 1.6 times the revenue of two years earlier — and ACF, ARF and SVR each held the largest share in their world markets.

The open question is what follows the smartphone. Rather than wait for its own laboratories, Dexerials bought the capability: Dexerials Precision Components was set up for micro-devices in 2020, Kyoto Semiconductor was consolidated in 2022, and in April 2024 the two were merged into Dexerials Photonics Solutions. The head office moved from Tokyo to Shimotsuke in July 2021, putting management on the same site as the plants; the listing shifted to the Prime Market in April 2022. In November 2024 Shinya announced growth investment of up to $1.2B (¥180bn) over five years, aimed at next-generation functional materials and at automotive and sensor applications. The year to March 2025 produced record profitability — sales of $737.7M (¥110bn), operating profit of $265.3M (¥40bn) — on a workforce of 1,888. Whether a company of that size can build a second pillar beside the three it already leads is the test of the current management.