Amidst escalating tension between the US and China that threatens to split the $550 billion global semiconductor industry, Japan’s government is taking a strategic step. It revealed a $6.3 billion agreement to purchase and privatize JSR Corp., a leading entity in chipmaking compounds, giving Japan direct control over the company.
Bridging the semiconductor rift
The Japan Investment Corp., backed by the government, intends to present a tender offer of around $30.40 per share to shareholders in December, JSR stated in a recent announcement. The overall deal may value up to approximately ¥903.9 billion.
This strategic move might give Tokyo enhanced control over the crucial compounds for manufacturing advanced semiconductors. JSR Corp., established in 1957, is globally renowned for its photoresists production and, along with Shin-Etsu Chemical Co. and Tokyo Ohka Kogyo Co., governs the worldwide supply of fluorinated polyimide and hydrogen fluoride.
These compounds are vital for developing semiconductors for high-tech applications, from supercomputers and data centers harnessing AI to missile control systems and everyday devices like iPhones. Government control over such critical components could give Japan a significant advantage amid the growing US-China technological divide.
Capitalizing on the semiconductor industry’s importance
A government-supported, unlisted JSR might be better equipped to take long-term risks to boost market share. On the day the deal was reported, JSR’s stock surged by 22%, marking the highest increase since 1999. The shares of its peers, Shin-Etsu and Tokyo Ohka Kogyo, also saw substantial gains.
Japanese authorities are placing their bets on the changing geopolitical landscape to regain some of their former dominance in the semiconductor industry. There are plans in motion to pump billions of dollars into domestic chip production with an aim to triple it by 2030.
The semiconductor materials industry is becoming an essential aspect of national policy globally. The JSR deal could set a new precedent for possible acquisitions, potentially boosting valuations for other companies in the sector.
As we watch these shifts in the semiconductor industry, what are your thoughts on Japan’s move to acquire JSR Corp.? We would love to hear your insights in the comment section below!
