The electronics company helps semiconductor firms from R&D to process implementation
A stagnant General Electric answered one of corporate America’s biggest questions: is it better to go alone or go together?
Last year, the industrial giant broke itself up into three businesses, with its core business dedicated to Aerospace, while energy spinoff GE Vernova and health care spinoff GE Health Care came to markets as independent firms. They found different levels of fanfare on their own, with General Electric nearly doubling, Vernova more than tripling, and GE Health Care putting up a less-impressive 28% return since their 2024 spinoffs.
With those results in hand, so too have come the copycats, spinoff plans in tow. There’s been Top Golf parent Callaway, logistics giant Fedex, and industrial name Honeywell, along with media goliaths Warner Bros. Discovery and Comcast.
And now, chemical giant Dupont is poised to repeat the formula after a nearly two year wait, the chemicals giant plans to complete the spin off of their electronics division, which it acquired through the merger of the firm with competitor Dow on Nov. 1, having completed the requisite steps. Among them have been choosing a Board of Directors, completing the Form 10, and even hosting an Investor Day to acquaint the masses with this lesser-known semiconductor player.
There’s also been picking out a chief executive and name. For that, we talked to Jon Kemp, soon to be the CEO of the independent firm known as Qnity. Existing shareholders in Dupont receiving shares of the new electronics firm, but some investors might perk up at the opportunity, especially given the company’s decades-long presence in the semiconductor industry.
“The important thing to know about Qnity is we will be one of the largest and broadest pure play for electronic materials, and really a technology leader for the semiconductor value chain,” Kemp said in conversation with TheStreet. “Just to size it for you: we guided it our investor day to expected 2025 net sales of $4.6 billion, with adjusted EBITDA margins of about 30%.”
That would make Qnity a giant in the broader market, which includes semiconductor companies like Integris, as well as other U.S. firms like Element Solutions or MKS Instruments. But Kemp says that the market newcomer’s advantage is how broad it is; whereas other firms are “fairly narrow”, Qnity offers end-to-end solutions for semiconductor companies.
“We’re really the only one that’s positioned across the entire value chain from chip fabrication to printed circuit board builds to assembly and display.” Kemp says. “Most [in] the industry would focus on one, maybe two parts of that value chain, but really no one has got that end-to-end point of view.”
Kemp says that means that breadth puts Qnity in a unique position to capture the boom in high-performance computing and AI data center investments, which come with more onerous demands on systems and device architectures. Today, 50% of the company’s business is specifically oriented around the semiconductor industry, while the remainder of their business is built around packaging chips, printed circuit boards, and assembly play.
Along that whole value chain are industry players which are becoming much more hands-on with things like material selection and design decisions.
“They’re just trying to get to devices that are smaller, thinner, faster, more powerful and also more energy efficient and they want partners who can help them solve those challenges across the entirety of the value chain.” Kemp said. “They need breakthrough solutions and materials providers to help enable their technology and that’s really where we shine.”
Among those customers are semiconductor fabs and industry OEMs from Samsung, TSMC, and Intel to SK Hynix and Micron, among others. Kemp says that 80% of the industry’s “technology leaders” are their customers, while the top 10 customers represent about a third of sales.
Those relationships aren’t new, either: Kemp points out that the average duration of a company’s relationship is 35 years.
Kemp says that collaboration extends beyond R&D, all the way to the “shop floor” where the company’s engineers “have a seat at the design table” with customers to build a road map to enable technology products. Then, once it’s ready, the company will also help customize and optimize processes for yield and quality, which are paramount for becoming “the partner of choice.”
Angles of Attack
Investors are likely to be interested in Qnity because of its exposure to the data center and AI market, which represents 15% of its business already and remains fast-growing.
“We’re still in the early days of adoption and the only place where you’ve seen AI adoption so far are in data centers and some consumer devices like high-end smart phones,” Kemp said. “However, you’re seeing these use case proliferate across the rest of the broader industrial economy, [where] there’s tremendous interest in automotive for autonomous driving; or industrial manufacturing for automation and robotics.”
Those other end-use cases make up the majority of the company’s core portfolio, with Kemp describing them as “high growth pathways.” Among them are broad industrial uses (20%) like aerospace or defense; automotive (15%); and wireless communication (10%). There’s also the high-touch consumer electronics business, which represents the remaining 40% of the pie.
Kemp bets the growth in data center could bubble over and “coincide with an increasing growth rate in some of these other use cases.” That would more or less make Qnity an option on the burgeoning chip field across key industries; not just data centers, but all corners of the economy.
If that indeed becomes the case, it could be good news for the market newcomer, which has already been benefiting from the technology industry’s various boom cycles for decades.
