Element Solutions (ESI) UBS Global Technology and AI Conference summary

Key business performance and market trends

• Achieved near-record third quarter, driven by strong growth in semiconductor and circuitry segments, with semiconductor business up over 20% and high single-digit growth in circuitry.

• Electronics business growth is propelled by advanced applications like high-performance computing, electric vehicles, and data centers, offsetting softness in legacy consumer electronics such as smartphones.

• Industrial market remains weak, but profits are maintained through strength in offshore business and margin management.

• Fourth quarter demand is tracking expectations, with currency headwinds as the main incremental challenge; no change to guidance.

• Secular trends in electronics, especially advanced packaging and AI, are expected to drive durable growth over multiple years.

Growth drivers and market positioning

• Growth is increasingly decoupled from traditional unit volumes like smartphones, with new demand from data centers and high-performance computing absorbing fixed manufacturing capacity.

• Leading-edge applications, particularly in advanced packaging and OSAT production, are key benchmarks for outperformance and share gains.

• Capacity expansion in semiconductors and electronics hardware is anticipated as new demand sources persist alongside cyclical recovery in legacy markets.

• The company is well-positioned in Southeast Asia, benefiting from supply chain shifts away from China, with greater margin opportunities in these regions.

• Forecasts indicate a stronger electronics environment in 2025, with positive sentiment extending into 2026.

Innovation, portfolio, and capital allocation

• Advanced packaging is a major focus, with a differentiated portfolio covering all circuit pathways and strong capabilities in fine-pitch and high-density applications.

• Kuprion, a recent acquisition, enables new applications in power and thermal management, with commercialization ramping up as supply chain capacity is built.

• Assembly business is shifting toward higher-value, higher-margin applications, with innovation in low-temperature soldering and advanced alloys.

• R&D investment is concentrated in product development and technical service, with a preference for acquiring breakthrough technologies like Kuprion rather than relying solely on internal research.

• Capital allocation remains opportunistic, balancing investment in innovation, M&A, and share buybacks based on cash returns and strategic fit.