Opportunities Report
Opportunity Management System
WACKER’s opportunity management system remained unchanged from the previous year. It is both a divisional and Group-level instrument. We identify operational opportunities and leverage them in our business divisions, as they have the detailed product and market expertise required for these tasks. We continuously use market observation and analysis tools to obtain, for example, a well-structured evaluation of industrial, market and competitor data. In addition, we conduct customer interviews to evaluate future opportunities. The monitoring process – how WACKER seizes opportunities – is based on key indicators (such as rolling forecasts and current-status reporting).
Strategic opportunities of overriding importance – such as strategy adjustments, potential acquisitions, collaborations and partnerships – are handled at the Executive Board level. Such opportunities are incorporated into WACKER’s annual strategy-development and planning process, with current issues discussed at regular Executive Board meetings. As a general rule, we elaborate different scenarios and risk-opportunity profiles for these issues before making decisions.
WACKER has identified a whole range of opportunities for advancing the Group’s success over the next few years.
Overall Economic Opportunities
Despite the slowdown in global economic output projected by many economic analysts for 2024, WACKER continues to see good opportunities to grow faster than global chemical production in the medium term, especially in young markets and sales regions. The strongest momentum, in our view, will continue to come from Asia, especially India and Southeast Asia. We are constantly expanding our presence in these markets in order to seize the opportunities there. Our technical competence centers and the WACKER ACADEMY are pivotal in achieving WACKER’s high standard of service and customer proximity. Additional growth potential for WACKER stems from programs in the USA and Europe to strengthen critical technologies and industry sectors, or to bring the corresponding value chains onshore again. These include not only semiconductor production, but also the individual stages in the photovoltaic value chain.
Sector-Specific Opportunities
Sector-specific opportunities primarily result from our broad product portfolio, which puts us in an excellent position to meet global megatrends. For example: the advance of urbanization, the trend toward conserving natural resources and energy, efforts to reduce carbon emissions, the world’s increasing mobility needs, and the growing demand for products that enhance the quality of life. These trends remain as important as ever to our business.
Rising affluence in emerging-market economies, particularly in Asia, coupled with ever more stringent market and customer requirements, is fueling demand for products incorporating high-value silicones. To benefit from this trend, WACKER intends to keep raising the percentage of high-value specialty silicones in its portfolio versus standard products. Areas of special focus range from the automotive and cosmetics sectors to personal care, health, medicine, electronics and clothing. Our aim is to meet this growth with innovative products and technologies.
We see good growth prospects for WACKER SILICONES in the electrical and electronics market, especially in automotive electronics. Growth is being spurred by digitalization, connectivity and electromobility. Electronic automotive assistance systems, for example, are becoming increasingly important and are indispensable for autonomous driving. Silicone gels and silicone encapsulants reliably protect the sensors and electronic components needed in such vehicles. In the coming years, electromobility is likely to gain further momentum. Forecasts put the global number of electric vehicles at 116 million in 2030. That would be a tenfold increase in the global EV fleet compared with 2020. Electric vehicles also require high-performance batteries. That is why we have developed thermally conductive silicones. These enable effective thermal management, thus ensuring long-lasting, maintenance-free batteries.
At WACKER POLYMERS, growth potential stems from the rising affluence of emerging economies, from increasing urbanization, and from the trend toward conserving natural resources and cutting carbon dioxide emissions. The shift away from conventional building materials and construction methods to value-added systems is set to continue. The scarcity of raw materials, like sand for example, boosts the use of high-quality building materials. Our products contribute toward longevity by affording protection from damage, which means fewer repairs and, as a result, fewer resources. The use of dispersible polymer powders for modifying dry mortar remains a key aspect here. The addition of these powders enables mortar mixtures not only to be processed more easily and applied more thinly, but also to have substantially improved properties. WACKER POLYMERS continues to see growth potential in environmentally friendly water-based paints and coatings. We work continually to avoid substances of very high concern such as volatile organic solvents or formaldehyde. The importance of a circular economy continues to grow, and we are supporting trends such as the use of renewable raw materials and the replacement of plastic packaging with paper.
WACKER BIOSOLUTIONS expects major growth opportunities from bioengineered products. One focal point here is on the production of actives based on messenger ribonucleic acid (mRNA) for therapeutic agents and vaccines. Through the sites acquired in Amsterdam (2018) and San Diego (2021), the division has considerably expanded its capacities and expertise in these fields. The completion of the mRNA Competence Center in Halle planned for 2024 allows us to further strengthen our position in this forward-looking market segment. Thanks to the acquisition of the company ADL BioPharma S.L.U. in Spain, WACKER BIOSOLUTIONS is now in a position to commercialize bioengineered products and process innovations for the food market faster and in a more targeted manner. The toll manufacturing business can be further expanded at the León site.
The main growth opportunities for our polysilicon activities stem from the strong demand for semiconductors and for the monocrystalline silicon used in highly efficient solar cells. We produce polysilicon of consistently very high quality – the kind that is crucial for making increasingly powerful semiconductors. Polysilicon from WACKER can already be found in nearly half the computer chips worldwide. In the photovoltaics segment, the trend toward monocrystalline solar cells continues to gather pace. To achieve the highest possible conversion efficiency, n-type solar cells are necessary, which in turn require silicon of particularly high purity. WACKER considers itself to rank among the leading providers in the n-type market segment. In order to make the most of the opportunities presented by these trends, WACKER POLYSILICON has placed its strategic focus firmly on the manufacture of polysilicon of the highest quality. Additional opportunities for the business division stem from programs in the USA and Europe to strengthen critical technologies like semiconductor and photovoltaic production in the respective local regions, or to bring the corresponding value chains onshore again.
Strategic Opportunities
In order to make the most of our divisions’ opportunities for further growth, we will concentrate on meeting rising customer demand and bolstering our downstream-product capacity, particularly for specialties. Our investment spending in this area in 2024 will be slightly below the prior-year level. The focus here is on expanding capacities at all four of our business divisions. We are expanding our capacities for specialty silicones at our sites in Nünchritz and Zhangjiagang (China) as well as in Karlovy Vary (Czech Republic). In Calvert City, USA, we are investing in additional capacity for the production of VAE dispersions. WACKER BIOSOLUTIONS is expanding its Halle site, transforming it into a technical competence center for mRNA actives. In Burghausen, we are expanding our production capacity for cleaning semiconductor-grade polysilicon – enabling us to make an important contribution to our customers’ technology strategy.
Performance-Related Opportunities
WACKER has a number of opportunities for improving its cost structures, processes and productivity. At WACKER POLYSILICON, we are continuing to implement our program to cut production costs. At our chemical divisions, we are tapping further cost-cutting potential with our productivity and efficiency program – the Wacker Operating System. Our various cost-cutting levers include: specific costs for auxiliaries; productivity advances on the manufacturing side; and broadening our choice of suppliers to secure more attractive purchasing terms.
