Japan bolsters its chip industry with buyout of equipment maker JSR

Japanese semiconductor equipment maker JSR has accepted a buyout offer of $6.4 billion (909.3 billion yen) from the Japanese government, in the country’s latest move to bolster its domestic chip industry.

JSR is the world’s leading maker of photoresists , the chemicals used for the process of printing circuit designs on chip wafers. It is also one of three Japanese companies that controls the world’s supply of fluorinated polyimide and hydrogen fluoride, compounds which are used to make the semiconductors found in supercomputers, AI-harnessing data centers and iPhones.

Under the plan, Japan Investment Corp (JIC) – state-backed investment enterprise of Japan, specializing in private equity and venture capital investments primarily in Japan – would offer JSR $31.25 (4,350 yen) per share, a price that represents a 35% premium on the company’s share price when the markets closed on Friday. The resulting deal will see the company go private and provide Japan with a greater control over a technological process of which it is already a global leader.

A government-backed fund could be the driving force behind reforms at both an industry level, and specifically at JSR, said the company’s chief executive, Eric Johnson.

“This is an opportunity. It’s not a crisis we are trying to solve,” he said, in comments reported by the Financial Times, adding: “Now is the time to push ahead with well-structured reforms to allow us to compete globally.”

Japan continues to boost domestic chip industry

Due to the ongoing global chip shortage and the escalating US-China chip trade war, there has been widespread restrictions placed on the export of chips. As a result, other countries have indirectly been caught in the crossfire, leading to a number of governments, including Japan’s, looking for ways to boost their own domestic chip industry.

In April 2023, the Japanese government pledged $532 million (70 billion yen) for projects to develop and make next-gen chips in the country, including a deal with Rapidus to make 2nm chips in Japan by 2025.

Chipmakers Micron and Taiwan Semiconductor Manufacturing Company (TSMC) have also recently announced investments in Japan’s semiconductor industry. TMSC has pledged about $7.4 billion to set up a second semiconductor manufacturing plant in Japan, while Micron announced plans to invest up to $3.6 billion  to bring extreme ultraviolet lithography (EUV) to Japan.