Key Points
- Japan’s government-backed fund, Japan Investment Corporation (JIC), has offered to acquire JSR Corp., a vital semiconductor materials producer, in a deal worth $6.2 billion.
- The proposed buyout aligns with Japan’s efforts to stabilize chip supply chains and grow its semiconductor industry, as microchips play a crucial role in the modern global economy and core services.
- This acquisition reflects the broader global trend of countries, including European nations, investing in local chip production and seeking greater control over the semiconductor industry to mitigate risks and geopolitical tensions.
On Monday, June 26th, AFP reported that Japan’s government-backed fund, Japan Investment Corporation (JIC), has proposed a $6.2 billion buyout of JSR Corp., a crucial player in the semiconductor manufacturing sector. JSR, known for producing compounds essential to semiconductor production, has announced its board’s support for the deal, which would result in the privatization of the company. While JIC aims to finalize the transaction by December, the regulatory procedures involved make it challenging to predict an exact timeline.
Established in 2018, JIC is an investment fund with the government as the majority investor, accompanied by smaller private-sector partners. This offer of 0.9 trillion yen comes as Tokyo and several other governments strive to stabilize chip supply chains, recognizing the significance of microchips in various electronic devices and core services such as healthcare, utilities, and law enforcement. The global semiconductor industry is expected to reach a value of $1 trillion by 2030.
With pandemic-related disruptions and tensions with China causing concerns worldwide, countries like France and Israel have sought ways to incentivize local chip production or gain greater control over the industry. In April, the European parliament and EU states formulated a plan to boost domestic chip production and establish a global market share. Additionally, Micron announced a $3.6 billion investment in Japan to manufacture next-generation semiconductors, and Japan itself committed to investing half a billion dollars in a project called Rapidus, aiming for mass chip production by 2027.
JSR is a major player in semiconductor materials manufacturing, particularly photoresists used in circuit formation. The company holds around 30 percent of the global market for photoresists and, along with two other Japanese firms, largely dominates the production of two other essential chip and display ingredients. Speculations about the acquisition deal had been circulating for some time, leading to a significant increase in JSR’s stock price.
Industry analysts, such as Travis Lundy from Quiddity Advisors, believe that JIC’s offer aligns with the Japanese government’s efforts to expand the semiconductor industry. Lundy suggests that this move by JIC is just the beginning and anticipates further developments. Notably, tensions between the United States and China have made chips a focal point, with the U.S. urging Japan and the Netherlands to restrict semiconductor technology exports.
Overall, the proposed buyout of JSR by the government-backed fund JIC highlights Japan’s commitment to strengthening its semiconductor industry and securing its chip supply chain amid global disruptions and geopolitical tensions.
Credits: Photo by Jonas Svidras on Unsplash
