This is Matt Reustle. Today we are breaking down Entegris, a supplier of advanced materials and process solutions for semiconductors. Small interferences with the different materials that exist within the semiconductor will slow it down and make it inoperable, and that's where Entegris comes into play.

We get into that discussion with our guest, Daniel Pilling from Sands Capital. He joins us to talk through the history of semiconductors in his own terms, what makes it such a fascinating industry to cover, and what makes Entegris unique operating as a small player in an overall huge universe, dominated by major players. Please enjoy this breakdown of Entegris.

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Show Notes

(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