SCREEN HD
Corporate History & Strategy

Keizo Ishida, who inherited Ishida Kyokuzan Printing Works, foresaw the spread of photography in the 1920s and grew pessimistic about the future of a business premised on traditional copper engraving. In photo printing, images need to be expressed through variations in the size of fine dots, and the core component for this was the 'glass screen.' Precision processing was required—drawing fine parallel lines on a glass surface, chemically etching them, and filling them with an opaque black substance—but at the time, no Japanese company possessed this technology, and the entire supply was import-dependent.

Keizo Ishida embarked on domesticating glass screens, but the precision required for glass surface etching far exceeded the existing technological level. In 1934, he developed the 'etching method for halftone screens for photo plate-making' and received a 7,000-yen industrial research incentive grant from the Ministry of Commerce and Industry to begin mass production research. However, establishing the mass production process proved challenging, and approximately 20 years from the decision to enter the field were spent on R&D and establishing production technology.

In October 1943, Keizo Ishida incorporated the business as Dainippon Screen Mfg. and became its first president. During wartime, the military had demand for photographs for publicity and propaganda purposes, and domestically produced glass screens were supplied as military goods. Since procurement under the previous import-dependent system was difficult during wartime, achieving domestic production was well-timed with the demand of this period.

The founding of Dainippon Screen Mfg. was the starting point at which a printing craftsman's family business transformed into a manufacturing enterprise centered on precision processing technology. The foundational technology of chemical etching on glass became the origin of a technological lineage that would extend to postwar photo plate-making equipment, shadow masks for color televisions, and semiconductor manufacturing equipment.

The precision glass etching technology that Keizo Ishida established over 20 years became the technological foundation for Dainippon Screen's postwar business development. In the 1960s, the company jointly developed shadow masks for color televisions with Sony, and in the 1970s, it entered semiconductor manufacturing equipment (wafer cleaning systems). Both were applications of etching technology—'chemically processing precision images.'

Tokujiro Ishida, grandson of the founder, stated that 'our various technologies achieved macro-scale development from the starting point of micron-level technology for creating images.' The technological lineage from copper engraving to glass etching to semiconductor manufacturing equipment demonstrates a structure where a technology pivot born from anxiety about the founding business's future led, 80 years later, to the world's leading market share in semiconductor cleaning equipment.

Dainippon Screen Mfg. had begun establishing contact with the semiconductor industry from the 1960s. In 1966, it developed an ultra-precision reduction camera for semiconductor manufacturing equipment, contributing to the lithography process required for semiconductor fabrication. The three core technologies accumulated through photo plate-making equipment—'positioning,' 'coating,' and 'surface treatment'—were fundamentally shared with the technology requirements of semiconductor manufacturing equipment, making the barrier to entry into the semiconductor field relatively low for Dainippon Screen.

President Tokujiro Ishida positioned entry into semiconductor manufacturing equipment as 'an applied extension of our core technologies,' setting forth a policy of applying the chemical etching and precision coating technologies cultivated in plate-making equipment to semiconductor manufacturing processes. In the 1970s, Japan's semiconductor industry was entering a period of rapid growth, and demand for manufacturing equipment was expanding.

In 1975, Dainippon Screen developed a wafer etcher (wet-type etching system) and formally launched its business targeting the semiconductor industry. In 1977, it commercialized the EMW-322/411, followed in 1978 by the spin coater (resist coating machine) SCW-421, spin developer (resist developing machine) SCD-421, and spin scrubber (cleaning system) SCC-421 in rapid succession. Within a short period, the company built an equipment lineup broadly covering semiconductor front-end processes including etching, coating, developing, and cleaning.

At this stage, Dainippon Screen was not yet specialized in cleaning equipment and was pursuing a strategy of deploying diverse equipment related to semiconductor manufacturing. Including joint development of printed circuit board manufacturing equipment (with Elna Corporation), the company was in a phase of establishing positions across a broad range of semiconductor-related areas.

From FY1978 onward, Dainippon Screen ramped up investment in semiconductor manufacturing equipment. Capital expenditure increased more than fourfold from 1.2 billion yen in FY1977 to 5.1 billion yen in FY1980, with aggressive investment continuously exceeding depreciation. R&D spending was also raised from the 3% range to the 5% range of revenue, reaching 3.8 billion yen in FY1983. The company also began large-scale hiring of engineers, with headcount expanding from 1,223 in 1977 to 1,783 in 1983.

Revenue grew more than sixfold from 10.5 billion yen in FY1972 to 67 billion yen in FY1983, with ordinary income reaching 6.56 billion yen. However, performance expansion during this period was also partly driven by the success of the 'Scannagraph' in photo plate-making equipment, and the semiconductor equipment business's standalone contribution to performance is estimated to have become significant from the mid-1980s onward. It was a structure of gradual business transformation, where profits earned from plate-making equipment were reinvested in semiconductor equipment R&D.

In the early 1990s, the semiconductor cleaning equipment market was led by Dainippon Screen (22% share), with mid-sized companies—Kaijo (11%), Sugai (12%), Sankyo Engineering (11%), and Shimada Rika Kogyo (10%)—each holding roughly 10% share in a fragmented market. Companies coexisted under trade practices of supplying equipment to their established semiconductor manufacturer relationships, but as wafer sizes grew larger, development costs escalated and the investment burden became increasingly heavy for mid-sized companies.

In 1993, major semiconductor equipment maker Tokyo Electron entered the cleaning equipment market and rapidly expanded its share. Tokyo Electron's share rose from 0% in 1991 to 3% in 1993 and 16% in 1996. The entry of a major equipment maker fundamentally altered the competitive structure and initiated a phase of consolidation among mid-sized companies. While the cleaning equipment market had expanded rapidly from 10 billion yen in 1987 to 83.8 billion yen in 1996, the number of companies that could capture the fruits of this growth was narrowing.

For Dainippon Screen, cleaning equipment was positioned as the revenue pillar to replace the founding plate-making equipment business. In FY1994, electronics equipment revenue surpassed printing-related equipment, marking the turning point of business transformation. Failure to maintain or expand cleaning equipment market share at this juncture would risk losing the company's growth foundation.

President Akira Ishida (from the founding family, tenure 1989–2005) judged that semiconductor manufacturers' transition from 200mm to 300mm (12-inch) wafers was inevitable. In 1995, President Ishida stated, 'We envision wafer sizes growing from the current 8 inches to 12 inches. The 12-inch generation is on track to enter production around 2000, but unless we begin supplying manufacturing equipment by 1997–98, we will not be able to lead the industry in this field' (Securities Analysts Journal 33(7)), declaring an industry-leading response.

In 1997, Dainippon Screen announced the batch-type cleaning system 'FC-3000' and introduced 300mm wafer-compatible models to the market. Simultaneously, in FY1997, the company recorded capital expenditure of 18.4 billion yen (consolidated) to construct the Taga Works in Shiga Prefecture, building a mass production system for 300mm-compatible equipment. For fundraising, the company issued convertible bonds in succession, raising 15 billion yen in FY1996 and 180 million Swiss francs in FY1997.

However, the silicon cycle entered a downturn in 1998, and Dainippon Screen recorded an operating loss of 13.1 billion yen and a net loss of 24.5 billion yen in FY1998. President Ishida stated, 'Despite extremely challenging revenue outlook, investment in R&D for next-generation semiconductors including 300mm wafers and expenditure for production systems to support advanced technologies cannot be avoided,' maintaining the policy of continuing investment even during the downturn.

Among cleaning equipment manufacturers, Dainippon Screen was the only company able to construct a new factory for mass production of 300mm wafer-compatible cleaning equipment. Mid-sized companies could not withstand the escalating development costs and capital investment burden and failed to follow through on the 300mm transition. The technological transition to larger wafer sizes functioned as a de facto entry barrier, prompting a shift from the fragmented market structure to an oligopoly.

In March 2001, Dainippon Screen constructed Fab.FC-1 (now S-1) at the Hikone Works and commenced full-scale mass production of 300mm-compatible cleaning equipment. In 2006, Fab.FC-2 (now S-2) was added to accommodate expanding capital investment by semiconductor manufacturers. Throughout the 2000s, Dainippon Screen steadily expanded its cleaning equipment market share, and as of 2022, it secured a 48% global share (1st place) in batch-type cleaning equipment and a 33% global share (1st place) in single-wafer cleaning equipment.

The massive investment during the downturn was accompanied by short-term pain—the FY1998 loss and solicitation of 142 voluntary early retirees—but the investment was recovered with the arrival of the 300mm wafer era. President Ishida's decision to make preemptive investments driven by the sense of urgency that 'we will not be able to lead the industry' ultimately locked in the competitive structure of the cleaning equipment market in Dainippon Screen's favor.