Business Breakdowns
Episode 137 Entegris: Solutions for Semiconductors
Business Breakdowns

Episode 137: Entegris: Solutions for Semiconductors

Business Breakdowns

Episode 137

Entegris: Solutions for Semiconductors

Daniel Pilling is a Senior Research Analyst at Sands Capital. We cover the role of chemicals in chipmaking, how Entegris carved out a unique niche in an industry dominated by giants, and how its cyclicality, capital allocation, and margins compare with other semis businesses.

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(00:03:00) - (First question) - Why semiconductors is an interesting industry for Daniel

(00:05:45) - An introduction to Entegris and its business

(00:07:19) - A look at the chemicals produced for computer chip manufacturing

(00:09:39) - A historical look at the importance of chemicals in chipmaking

(00:11:45) - The cost of chemicals within a chip

(00:13:55) - The backstory as to how Entegris started operating and their competitors 

(00:17:03) - How the business has been able to remain so independent

(00:21:57) - The stickiness of the business and how they aim to be the partner of choice

(00:23:22) - A look at previous execution and any issues that have occurred in the past

(00:23:56) - The cyclicality of the semiconductor industry historically

(00:25:45) - An overview Entegris’ pricing power and maintaining margin profile

(00:28:32) - Operating leverage within the business and how the margin profiles differ between the different segments

(00:30:03) - A look at the business’ research and development spend

(00:32:01) - How the business has approached mergers and acquisitions over the years

(00:34:04) - Whether the business has ever been a target acquisition for a larger player 

(00:34:48) - The outlook for Entegris’ revenue growth, expected margin expansion due to operating leverage

(00:37:05) - Possible threats to the business from new technology

(00:39:04) - A look at other potential risks to Entegris

(00:41:18) - Should the industry’s growth slow or even decline how it could affect Entegris 

(00:42:46) - How Daniel values the business comparing it to its peer group

(00:45:04) - Other risks to the business not mentioned

(00:46:00) - The lessons learned from Entegris

 

Entegris: Solutions for Semiconductors

Introduction

Matt
This is Matt Reustle, and today, we are breaking down Entegris. Over the past two years on Business Breakdowns, we have covered many names across the semiconductor ecosystem, and Entegris is another name to add to that list.

Now what exactly do they do? They are a supplier of advanced materials and process solutions for semiconductors. In layman's terms, they are developing chemicals and filters, which are applied to all of the different materials that go into a semiconductor, allow those materials to be more pure and operate at maximum capacity.

You can imagine with the small size of chips, the smallest things that might interfere with the different materials that exist within a semiconductor will slow it down and make it inoperable. And that's where Entegris comes into play.

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