Wednesday, Aug 30, 2023
Update At 12:00    USD/EUR 0,92  ↑+0.001        USD/JPY 146,24  ↑+0.368        USD/KRW 1.321,31  ↑+3.12        EUR/JPY 158,91  ↑+0.23        Crude Oil 85,80  ↑+0.31        Asia Dow 3.418,86  ↑+17.15        TSE 1.934,00  ↑+1        Japan: Nikkei 225 32.529,72  ↑+302.75        S. Korea: KOSPI 2.571,80  ↑+19.64        China: Shanghai Composite 3.138,78  ↑+2.8948        Hong Kong: Hang Seng 18.615,13  ↑+131.1        Singapore: Straits Times 3,29  ↑+0.008        DJIA 22,02  ↑+0.05        Nasdaq Composite 13.943,76  ↑+238.626        S&P 500 4.497,63  ↑+64.32        Russell 2000 1.895,54  ↑+26.5312        Stoxx Euro 50 4.326,47  ↑+32.78        Stoxx Europe 600 459,83  ↑+4.42        Germany: DAX 15.930,88  ↑+138.27        UK: FTSE 100 7.464,99  ↑+126.41        Spain: IBEX 35 9.581,20  ↑+91.1        France: CAC 40 7.373,43  ↑+48.72        

Watertight technology for global industry

Interview - June 16, 2023

Organo Corporation, a leading Japanese water engineering company with 70 years of experience, seeks investors as it looks to support the semiconductor, pharmaceutical, energy, and environmental sectors worldwide with its advanced technologies.


Your company’s development has coincided with Japan’s postwar development in many ways. Organo was established in 1946 to furnish the country with clean water, which it did through a series of developments in the ensuing decades to foster Japan’s industrial revival. In 1984, Organo entered the water business for pharmaceuticals, and in 1986 it established its research center to further its development of clean-water systems. Your company began supplying the ultrapure water required by the semiconductor industry in the 1990s, and nowadays Organo is a comprehensive water engineering firm.

Organo has been adaptable throughout its history. Could you give us an insight into your monozukuri (an artisan’s passion for making things) and how you are able to face off with regional competitors from Taiwan, China, and Korea?

Organo has been an R&D-oriented company since its establishment and developed a market utilizing results and data from in-house experimental devices. To stay ahead of market demand, we built an integrated R&D center in 1986. Until then, we operated two R&D facilities with limited space and equipment. Japan’s eventual rapid economic growth after World War II generated huge demand for deionized water. Organo kept building its track record by developing technology that answered customers’ demands, whether for modifications and improvements or entirely new requirements.

We closely followed customers’ requirements and further developed ion exchange resin and its applications. As a result, we can today provide purification solutions for wide-ranging fields: ultrapure water (UPW) systems for semiconductor manufacturing, which requires impurity-free water; condensate polishing systems for power plants that protect steam turbines from corrosion; distillation and purification water systems for the pharmaceutical industry; decolorization, desalination, and separation technologies for sugar refineries; and UPW systems for laboratory use. And because no analyzer on the market could detect extremely low levels of ions or particles in UPW, Organo developed an innovative analytical technique to prove to customers the degree to which impurities have been removed from UPW.


When the average consumer thinks about water technologies, filtration and purification come to mind. But recovery-based technologies are often not considered. Moving forward, these latter technologies will be key to achieving carbon neutrality. Your technologies to date enable the recovery of rare metals and other crucial elements from wastewater. Could you speak about those technologies and how they’re contributing to carbon neutrality?

In addition to the energy-saving water treatment systems and wastewater treatment systems that we provide, we believe that our technology for recycling NMP (N-Methyl-2-pyrrolidone) contributes to carbon neutrality significantly. NMP is one of the expensive raw materials used in lithium-ion batteries, and the conventional method for its recycling is distillation, which requires huge energy.

Organo instead applies an ion exchange resin to purify MNP and to lower CO2 emissions throughout NMP’s life cycle at one-third the energy cost of distillation. The ion exchange resin is similar in its energy-saving respect to our first product, which we released just after our establishment: a heat-free water distillation system that offered solutions to a postwar economy that lacked fuel and electricity.

EcoCrysta, another of our innovative technologies, recovers hydrofluoric acid using crystallization and thereby contributes to CO2 reduction. This product is primarily used to recover hydrofluoric acid from the wastewater generated during semiconductor manufacturing. But we also have our eye on EcoCrysta’s application in reducing CO2 from the production of hydrofluoric acid and the transport of raw materials.


The semiconductor industry is enjoying exciting times following the semiconductor chip shortages that we saw during the COVID-19 pandemic. The world’s big semiconductor fabricators, such as Sony and Taiwan Semiconductor Manufacturing Company (TSMC), are opening foundries worldwide and pushing global production. In Japan, there is a big fabrication plant in Kumamoto that is a joint venture between Sony and TSMC. With all the foundries opening around the world, there obviously will be an increase in the need for foundry-related materials and equipment. Do you see this as an opportunity for Organo? If so, what are your plans to capitalize on the growth in foundry numbers?

Periodic forecasts from several sources point to continuous growth in semiconductor production. So this is a big opportunity for us. We have participated in the market for semiconductor manufacturing technologies since 1956 and developed our UPW system specifically for and aligned with the needs of semiconductor manufacturers. We aim to grab every opportunity for our growth by supporting established and new customers with cutting-edge technologies from ongoing R&D.

We established a local office in Arizona mainly to participate in a project by a Taiwanese semiconductor manufacturer customer but also to achieve a broader strategy of expanding our business in the United States. Finding additional good partners to do business with and grow within a new area is an important next step.


Among the trends we’re seeing in semiconductors is miniaturization, not only of the final product but also throughout the entire process, front end to back end. Crucial to this is an impurity-free environment because any impurities in the production stages will undermine the level of precision needed to produce the quality and miniaturization demanded of semiconductors by today’s market standards. How does Organo support its clients in the semiconductor industry with the purity needed to manufacture high-end, ultrathin semiconductors?

We provide our customers with equipment that stably supplies the required huge volumes of UPW. We also offer them our capability in removing specific ions and extremely small particles to substantially improve their manufacture and yield of semiconductors. We are, moreover, forever furthering our analytical techniques to help customers detect the tiniest impurities and other water-quality issues that lower manufacturing quality. Our technologies thus underpin customer profitability.


You speak of your continuing relationships with these big fabrication companies, which buy your equipment to set up their facilities and then rely on your water management program. From 5,000 to 6,000 liters (1,321 to 1,585 US gallons) of municipal water is needed to produce 4,000 liters (1,057 US gallons) of UPW. How can the semiconductor industry’s water usage be more sustainable?

There are two points here. First, the recovery rate of UPW production must be improved. Second, more must be done to recycle wastewater. Maximizing recovery and recycling is ideal, but the trade-off is cost. Our R&D team is examining this issue.


Japan is known for having the world’s first super-aged society and for its people’s lengthy average lifespan of 82 years. The decline in the working-age population, meanwhile, is a concern for Japanese companies. A shrinking workforce calls for heightened automation. How is Organo responding to domestic demographic changes, and to what extent are you looking overseas to compensate?

There are opportunities and risks. Our customers and our engineers are aging and retiring, constricting our business opportunities and our skilled manpower. So we are introducing and embedding in our facilities laborsaving automated devices, such as sensors and other aids for autonomous control. Organo is also investing in digital solutions that mirror our engineers’ expertise and embedding those solutions in our training programs to make that knowledge readily accessible.

An aging population isn’t exclusive to Japan. China and many Western countries are following suit. So developing autonomous laborsaving devices presents us with a business opportunity.

Silver linings aside, the imminent shortage of manpower to sustain the growth of our company is a concern. To compensate, we are as I’ve said digitizing and automating to heighten efficiency. We are also welcoming overseas workers to our domestic operations and have set up a global engineering center (GEC) in Vietnam where we are training local engineers. These highly educated and enormously motivated young Vietnamese are already contributing to our plant design operations.


You recently opened an office in Arizona. The US is investing more than any other country in semiconductor manufacturing. Its CHIPS and Science Act allots US$52 billion in incentives to establish semiconductor foundries, and Intel has built foundries in Arizona and Ohio. Please tell us about your US operation. What are your goals for it?

Our Arizona office is, as I explained, focused on supporting a Taiwanese semiconductor customer’s project there and, subsequently, on that project’s operation and maintenance. The office is also searching for opportunities to support other semiconductor manufacturers in the United States.

We are still learning how best to enter what is for us a new market where plant engineering differs from what we’ve experienced elsewhere. We believe, however, that our technologies have competitive advantages that position us in the United States for the same level of growth we’ve achieved in Taiwan and China.

Organo caters to many different industries. Is there an application or industry aside from semiconductors that you’re looking to make more prominent in Organo’s operations?

First, pharmaceuticals, especially biopharmaceuticals. These are growing industries in which Organo has long participated in such areas as validation, which calls for absolute precision and control.

Second, pure water (PW) and ultrapure water (UPW) equipment for laboratories. A small amount of either or both is needed by research and medical institutions and factory laboratories. We engage in the PW and UPW markets domestically and are now targeting markets abroad.

Third, organic solvent refining systems, and not just for the NMP recycling I’ve mentioned. We are also exploring purification technologies for an organic solvent for applications in other than water. And we have innovative technology for sewage treatment facilities that we believe has potential, including in overseas markets.


You offer the μ series (PX-μ) desktop UPW purifier that can process up to 10 liters of UPW a day, making it ideal for inorganic analysis by small labs. Why did you develop this product? And what are your plans for these small UPW systems?

Organo has offered PW laboratory equipment since 1956, but not until recently did we offer UPW equipment to treat daily flow rates as low as 10 liters. This equipment requires the same technology as that of the large UPW systems for semiconductor manufacture, housed, however, in a compact, user-friendly design. The complex structure needed to achieve that combination made it difficult for users to replace such consumables as the filter cartridges that ensure water purity. Improper connections or settings can easily introduce impurities.

Organo’s revolution lies in ensuring water quality and easy filter replacement. Those users can replace the filter cartridge without compromising water quality is epoch-making. This is the background of our PX-μ, which in addition to high functionality features competitive pricing.

The PX-μ received the Nippon Brand Award at the 65th Top 10 New Products Award ceremony in 2022, founded and sponsored by Nikkan Kogyo Shimbun, a specialty business and industrial affairs newspaper in Japan. Each year, that newspaper selects new products that it evaluates for uniqueness; world-class competitiveness; and technical, industry, and social contributions, among other factors. The PX-μ was evaluated highly on all counts, and we believe that we can expand its sales overseas because its advantages will surely be viewed in common all over the world.


Organo’s research center in Kanagawa focuses on more than the development of UPW products. It is exploring the filtration of wastewater and other mediums. What insights can you give us on some of Organo’s latest technologies?

We have many items in ongoing R&D. In 2022, we began developing the next-generation UPW system. We are pursuing unprecedented water purity by researching ultrafine analysis. Another focus is non-water purification, including of the organic solvents and polymers used in semiconductor manufacturing.

We are also ensuring that the Electrodeionization (EDI), one of our UPW polishing units, doesn’t require acid or alkali chemicals for regeneration but instead uses electricity. We are accelerating the practical use of this added-value EDI, which is superior to conventional models.


During the COVID-19 pandemic, we saw a lot of supply chain disruptions. There were shortages of certain products, especially semiconductors and materials. Logistics problems centered on hard-to-get shipping containers and grounded airlines compounded the disruptions, as did China’s zero-COVID policy. The world’s supply chains were effectively cut for six to seven months, especially as cities the likes of Shanghai went into lockdown.

Procurement is vital to your business because of the variety of materials you utilize. Have you altered Organo’s supply chain in light of COVID-19’s disruptions?

COVID-19 continues to adversely affect our supply chain. Material prices are skyrocketing, and delivery lead times remain an issue. Lead times for some materials are four to five months up to the worst case of two years. Our close communication with our critical materials suppliers lessens the impact of lead times somewhat.

We are, meanwhile, looking for easier-to-obtain substitutes for our less critical materials. We must, though, be 100% sure that substitute materials do not degrade the quality of our products. For this reason, Organo launched a team dedicated to global sourcing, and it is looking for and evaluating substitute materials. Our vast array of suppliers worldwide is assisting our global sourcing team in its efforts.


You assumed Organo’s presidency only a year ago at a very interesting time for your company. Organo saw record success in 2020. It was the first time that your company had achieved ¥100 billion in sales. Organo also in 2020 recorded the second-highest net income in its history. As you look to continue that growth, which countries besides the United States do you think will be key in helping Organo sustain such record-setting results?

Considering the enormity of its population, India cannot be overlooked as a potential market of vast size. The semiconductor industry is expanding globally, including into India, and that industry needs a high-end UPW system of the sort provided by Organo.


A look at Organo’s latest financial numbers, for the third quarter of fiscal 2023 year, reveals that the company is doing extremely well. Sales have increased more than 20%, and your operating income has jumped 60%. Can you comment on these results? What is making the 2023 fiscal year so good for Organo?

The main reason is the boom in semiconductor investment. UPW technology is required by that industry, and I believe that Organo’s system is the best fit. We can provide all of the technology and know-how to serve the semiconductor industry. At least for now, we are unconcerned with meeting demand. If we increase production efficiencies, we will catch up with demand. Increased efficiency, though, makes it necessary for us to find additional talented personnel. DX, or digital experience, and digital innovation are the focus, and I think this is an exciting time.


You transferred from Tosoh Corporation to take on Organo’s presidency and brought with you extensive experience of Western markets. How will your international background help Organo?

One of the things I learned through my assignments in the United States and European countries is that finding the right person—an American in the US, for example—who knows the local market and can strategically manage the business and collaborate well with his or her Japanese peers is fundamental to success internationally. Support of that local manager by HQ’s top management is also important. I want to work with my colleagues in Organo to further strengthen our overseas business from that perspective.


Imagine that we come back on the final day of your presidency and repeat this interview shortly before you hand the baton to Organo’s next generation of leaders. What do you hope to have achieved by that time?

I would be happy if I could say on my last day at Organo that I have planted the seeds of Organo’s continued growth. This could be in the shape of a new business, a new entity, a new product, or a new mindset. Organo has already germinated the seeds of and begun marketing for products and technologies that await implementation to be of benefit to society. I seek to support those efforts while planting seeds to encourage Organo’s people to tackle new challenges and opportunities.