Japan strengthens hold on semiconductor raw materials amid global chip shortage

Name: There’s a global semiconductor shortage and this is why it matters
Uploaded: 2021-09-27T23:00:15.000Z
Duration: 6 min 1 s
Description: There’s a global semiconductor shortage and this is why it matters

The country’s tech firms are consolidating their grip on the components and chemicals vital for the manufacture of the most advanced chips

This gives Japanese manufacturers an advantage at a time of deepening US-China rivalry and geopolitical concerns facing other producers such as Taiwan and South Korea

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Samsung microchips on display in Seoul, South Korea. Japan is a major supplier of the materials used to make the computer chips that run most devices. Photo: AP

Julian Ryall

Published: 7:00am, 28 Sep 2021Updated: 10:48pm, 28 Sep 2021

Japanese technology companies may no longer manufacture the lion’s share of the mass-market semiconductors that go into every conceivable electronic device used around the world, but they are increasingly consolidating their control of the development and production of the advanced materials required for cutting-edge chips.

At least five Japanese firms have significantly stepped up output at existing plants or invested heavily in new facilities to keep pace with demand for components and chemicals that only they can deliver. Around 60 per cent of the materials and components are exported, primarily to Taiwan and other key manufacturing hubs, with the rest utilised domestically.

Virtually the entire global supply of photoresist coating and high-end aluminium electrolytic capacitors – critical in the manufacture of the most advanced chips – comes from Japan, which also has a market share of 60 per cent or more of the global market for another 70 advanced materials.

Two Japanese companies alone, Shin-Etsu Chemical and Sumco, control 60 per cent of the global market for silicon wafers.

The development comes amid a global microchip shortage that has hit industries from consumer electronics and home appliances to car manufacturing. So acute has the shortage become that researcher IHS Markit recently slashed its car manufacturing forecasts for this year and each of the next two years by a combined 14.5 million vehicles, according to Bloomberg.

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There’s a global semiconductor shortage and this is why it matters

Damian Thong, head of Japan equity research at the Macquarie Group in Tokyo, said Japanese companies were able to use their specialist skills and knowledge in engineering and physics to manufacture niche products.