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The specialists in gas and chemical management services

Interview - October 18, 2022

As part of its Total Gas and Chemical Management service, Toyoko Kagaku accompanies its clients every step of the way: from gas and chemical delivery, to the installation, management and monitoring of supply systems, to exhaust recovery and recycling.

TAKAHIRO KATO, PRESIDENT OF TOYOKO KAGAKU CO., LTD.
TAKAHIRO KATO | PRESIDENT OF TOYOKO KAGAKU CO., LTD.

In the last 20 or 30 years, Japan has seen the rise of regional manufacturing competitors from countries like South Korea, China and Taiwan who have replicated Japanese monozukuri processes by taking advantage of cheaper labor costs, pushing Japan out of mass production markets. However, we still see many Japanese firms as leaders in niche B2B fields. How have Japanese firms been able to maintain their leadership despite the stiff price competition?

Japanese companies that have maintained their competitiveness have been continuously improving their kaizen, which extends to production engineering skills and R&D. Kaizen is not only employed from the top down, but it is integrated in the actual production level. Since we handle gas, which is rather dangerous, we prioritize safety and set it as a fundamental pillar of our business. In our 70-year history, we have not had any major fatal accidents, helping us gain the trust of our customers. I think that we have been able to set our competitive advantage by maintaining a remarkable level of safety. With regard to our technical capabilities, we have been perpetually working hard to respond to customers' demands, even semiconductor customers who have very specific and high-level demands as they always aim for precision. Therefore, safety and technical improvements are how we are challenging our staff with every new day that welcomes us. I think all these factors contribute to the success of Japanese companies in maintaining their competitive advantage.

 

Industrial gas being released has been a major cause of concern as it contributes to global warming as well as other consequences such as negative effects on human health and stunting plant growth. Furthermore, the former Suga administration has announced that Japan must be a carbon-neutral society by 2050. How is your company reducing its environmental burden?

We are working on four activities. First, we are promoting the recycling business for gas and chemicals like our Helium Recovery System. The key is recycling limited resources. Secondly, we are advocating a carbon-neutral society by selling solar panels to our customers' plants. Moreover, we are constructing hydrogen stations not only domestically, but also overseas. We are encouraging the use of leak sensors that we have developed, which reduce exposure to toxic chemicals and avoid pollutants that affect human health. Our improved liquid recognition sensor can identify different liquids. The  new version of our liquid leak sensor can detect leakage even when the chemical tank is outside and exposed to rain. Through this development, which received an award, we can minimize the toxic chemicals that leave the plant. Lastly, an indirect contribution to realizing a low-carbon society is supporting SiC devices through our extra high-temperature process equipment. This helps our customers like ROHM, Mitsubishi and other power device companies make their production more efficient.

 

How were you able to detect liquid leaks outside?

We use optical bending and reflection as sensors.

 

Your business is divided into three main segments: gas solutions, equipment solutions and component solutions. Which one is your current focus? Which one has the most potential for future growth?

Our three business divisions are interrelated and equally important. We were selling surplus gas provided by the train company when we founded our company, but after a while, we supported our main customer who began the development and production of semiconductors about the same time as when Japan did. Since then, we progressively converted our business from not only selling gas, but also creating our gas supplying & management systems, selling equipment, piping and construction. This diversification of our business proved to be a turning point and the basis of our three main divisions. Each business division is evolving day by day based on our customers’ demands. As we give full support to our customers, we set our sails to where they take us.

 

Japan is very well-known for process automation but still lags behind when it comes to the adoption of digital technologies. It is only ranked 28th in the IMD digital competitiveness ranking; however, this is slowly changing. Can you explain in more detail your Gas Monitoring System (GMS) which monitors the safe and stable delivery of gas? How else are you utilizing digital technologies in your business?

Safety is our priority. Together with our customers, we have developed this system to ensure that there will be no gas leaks and accidents at their plants. This monitoring system is just a part of Total Gas & Chemical Management service (TGCM). Starting from receiving the gas to supplying the gas to the equipment and up until the gas is exhausted from the plant, we have approximately 40 to 50 resident staff assigned to 24/7 monitoring. Our gas monitoring system was designed to give support to that arrangement. Our TGCM business has expanded to supplying the labor and integrated IoT system to guarantee safety.

 

Japan reinvented its position in the semiconductor industry when it lost market leadership, but was later able to maintain a large global market share in supplying materials for semiconductor manufacturing equipment. When we interviewed the president of Tokyo Electron, he said that the semiconductor industry is expected to double from USD 500 billion to USD 1 trillion in the next five years. As a leading supplier of semiconductor equipment, what is your assessment of Japan's semiconductor industry? What opportunities do you see for your company?

I think we are looking at a massive expansion similar to other countries. As the population ages, many things have to be automated like how Haneda Airport now uses autonomous wheelchairs. Growing automation will influence the increase in semiconductors as well. I think that in Japan, changes in vehicles and AI will also be applied, and the semiconductor business market will expand. We are looking at the general semiconductor market expansion as an opportunity to grow our business, focusing on where semiconductors are produced. The Japanese government is trying to bring TSMC to Kumamoto. Furthermore, Micron is expanding its plant and KIOXIA is doubling or tripling its production capacity. Although those are expansion opportunities for us, other countries are more than doubling their production volume at an incredible rate. Hence, the Japanese market is very important for us, but we do want to expand overseas where semiconductors are booming. We will provide the same solutions that we offer here in Japan.



Due to the pandemic, there have been massive logistic issues and increased demand for consumer electronics, resulting in an extensive semiconductor shortage. What impact did this shortage have on your business?

Some of the electrical components for our equipment were difficult to procure. Despite the difficulties, we still benefited. The semiconductor demand has been undeniably strong, which was extremely advantageous for our business.

 

The primary function of your gas cabinets is to contain potential toxic gas leaks, and your full-auto gas cabinet has high safety and compactness with an integrated purge functionality. How is your full-auto gas cabinet superior to more conventional ones?

Through our full-auto gas cabinet, we can reduce human errors. If it is fully automated, it can be directly linked to the gas monitoring system, which can immediately detect problems. After detection, it shuts the system down to keep the customers safe. It is beneficial for customers to gather data for big data usage.

 

Your other innovation is the Anesys, which is a liquid material supply device that automatically replenishes itself. Can you tell us more about your R&D strategy? Are there any products that you are currently working on that you would like to showcase to our international readers?

Our developments are based on the demands of our customers; thus, we communicate with them to seek what they would want in the future. We would like to highlight our latest development - the liquid recognition sensor. Our SiC thermal process  equipment was released in 2016 and has garnered a top level share in the market.

 

What role does collaboration and co-creation play in your business model? Are you looking for co-creation partners in overseas markets?

I think it depends on which country we decide to go to. When we began our expansion in China in the early 90s, we did not know anything about China. We were only following our Japanese customers, but at some point, they withdrew from that market. We were left on our own and we had to collaborate with our customers there as a result. When we decided to stay, we were determined to localize our skills with the aim of maintaining the same skill level as in Japan. Honestly, the Chinese market was not that big at that time, but that base survived and grew. That decision primed our current position in China.

 

Moving forward, as you continue to expand overseas, which countries or regions have you identified for further expansion? What strategies are you looking to employ? Could you elaborate on your international business strategy?

The semiconductor business is booming in several countries, and China has the largest market with the biggest production sites. It involves massive investments. Our target is to expand further in the Chinese market. If there is an opportunity, we would also like to expand to countries that produce semiconductors. We were eyeing other Eastern Asian countries, unfortunately, those specific nations could not produce semiconductors. From a geopolitical point of view, every country will try to produce semiconductors locally. Therefore, I believe we will have plenty of opportunities to expand into those startup production companies. We need to partner up with a company with an advantage, especially concerning local knowledge, and we need to leverage governmental support because it is key to succeed in the business.

 

Imagine we come back for your 75th anniversary and have this interview all over again. What would you like to tell us? What dreams do you have for this company? What goals would you like to have accomplished by then?

Our business will be growing together with the semiconductor industry's expansion. More than that, I would like to provide more value to our customers and society while endeavoring to contribute to the environment.

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