CINNO Research industry information, Japanese material manufacturers are increasing the production of semiconductor materials in South Korea and Taiwan. Tokyo Onka will double the production capacity of photosensitive materials (Photo Resist, used to form wiring) at its Korean subsidiary, and Daikin will build a new plant in South Korea to produce gases used in semiconductor manufacturing processes. Although it has been imported from Japan so far, it is now hoping to expand the supply chain by increasing the production capacity of cutting-edge semiconductors.
Tokyo Incheon is investing billions of yen in its existing factory in Incheon, South Korea, to expand equipment and double its production capacity in 2018. Photosensitive materials are used to draw circuits on silicon wafers. Tokyo Yinghua’s photosensitive materials account for 25% of the global market share, ranking first.
Tokyo Yoshika will first import raw material resins from Japan to produce photosensitive materials (which can be used in cutting-edge semiconductor production technology – EUV extreme ultraviolet lithography), then purchase solvents locally in South Korea, and finally carry out combined production.
(Image source: Nihon Keizai Shimbun)
Daikin decided to set up a joint venture with a South Korean semiconductor production equipment manufacturer, investing 4 billion yen (about 236 million yuan) to set up a new factory in South Korea. The new plant will start producing gases used in the etching process from 2022. Daikin has been supplying products made in Japan and mainland China until now, and will improve its competitiveness through localized production in the future.
Tokyo Yinghua and Daikin will respectively provide semiconductor materials for semiconductor giants such as South Korea’s Samsung Electronics and SK Hynix.
Shin-Etsu Chemical’s new plant for photosensitive materials in Taiwan has started operations. The investment in equipment (including the expansion of domestic factories) is about 30 billion yen (about 1.77 billion yuan). EUV photosensitive materials, which have been produced only in Japan until now, have been produced in Taiwan. Showa Denko Materials (formerly Hitachi Chemical), a subsidiary of Showa Denko, also plans to invest 20 billion yen (about 1.18 billion yuan) by 2023 to expand the production of silicon wafer grinding materials and wiring substrate materials in South Korea and Taiwan.
Investments by Japanese chemical companies in Korea and Taiwan are gradually expanding. According to the balance of payments statistics of the Bank of Japan, direct investment in the chemical and pharmaceutical fields (as of 2019) continued to grow, centered on the chemical field. Among them, semiconductor-related materials are obviously driving the growth of investment. Semiconductor (using cutting-edge 300mm wafers) production capacity in terms of countries and regions, South Korea and Taiwan together account for half of the world. As Samsung Electronics and Taiwan Integrated Circuit Manufacturing (TSMC) have successively decided to make large-scale investments, the demand for semiconductor materials dominated by Japan will continue to rise.
Tokyo Yinghua is continuously strengthening its localized R&D capabilities and production system in order to fully meet customer needs. “Over the past three years, there have been more investments in overseas regions such as South Korea, Taiwan, and North America” (Tokyo Yoshika). Since there are no companies in Japan that are expected to apply EUV to semiconductor production, customers are mainly concentrated overseas.
Concerns about the supply chain also promote localized production. In 2019, the Japanese government strengthened control over the export of semiconductor materials to South Korea. In order to get rid of its dependence on Japan, the Korean government is committed to the localization of various materials and equipment, and promotes investment by domestic and foreign companies through measures such as subsidizing R&D expenses and tax incentives in some regions. Therefore, DuPont has also decided to produce products in Korea. Photosensitive materials for EUV. Japanese companies still need special permission from the Japanese Ministry of Economy, Trade and Industry to export chemicals that are subject to control to South Korea. The hydrogen fluoride shipments of Japan’s STELLACHEMIFA Co., Ltd., which produces hydrogen fluoride, in fiscal year 2019 (April 2019-March 2020) fell by 26% compared with the previous fiscal year, and shipments during April-December 2020 The volume remained at the same level as the same period last year.
Companies such as Samsung Electronics have decided to make large investments, and demand for semiconductor materials has soared. (Image source: Nihon Keizai Shimbun)
In contrast, there are no export restrictions for localized production in Korea. A cadre of a large-scale chemical manufacturer in Japan said: “In the case of risks in the supply network of China, the United States, Japan and South Korea, the voice of localized production is getting stronger and stronger.”
In the future, Japanese semiconductor material manufacturers may be forced to expand production capacity in Asia and the Americas. The Biden administration in the United States is working on improving the semiconductor supply chain, and on April 12, it held talks with executives from 19 companies about stabilizing supply. US Intel has decided to invest 20 billion US dollars (about 130 billion yuan) to build a new factory in Arizona, US (which also has the opinion of the US government). TSMC also plans to build a new factory in Arizona.
In terms of silicon wafers, Japan’s Shin-Etsu Chemical and SUMCO hold about 60% of the global share. In addition, in terms of photosensitive materials, Japanese companies also account for nearly 90%. In addition, many Japanese companies have production bases in the United States, and now almost all of them are operating at full capacity. If the above-mentioned new semiconductor factories of Intel and TSMC operate successively in the United States, Japanese companies will be required to supply materials, so there is also a risk of increased burden (including capital) for Japanese companies.
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