(Bloomberg) — Resonac Holdings Corp. is studying deal structures for a possible acquisition of government-owned chip linchpin JSR Corp., a key step in the chemicals maker’s ambition to corner the Japanese AI semiconductor materials market.
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Now controlled by state-backed Japan Investment Corp. following a $6 billion buyout, JSR is the world’s largest maker of photoresists — a light-sensitive material crucial for mapping circuit patterns onto silicon through a process called lithography.
“We’ve become overwhelmingly strong in many chip chemicals, but we don’t own one for lithography,” Hidehito Takahashi said in an interview. “We need that to be able to say we are a Japan-born specialty chemicals company with a substantial global market presence.”
The 62-year-old executive last year said Resonac hopes to be involved when JIC exits JSR. On Wednesday, Takahashi said he’s doing “mental exercises” and simulating potential deal structures and the partners that such a move might require.
Shares of Resonac erased its gains and fell 3% on the news.
The bulk of the world’s photoresist is made in Japan, home to JSR competitors Tokyo Ohka Kogyo Co., Fujifilm Holdings Corp. as well as Sumitomo Chemical Co. The JSR buyout, blessed by the country’s economy ministry, was aimed at kicking off much-needed consolidation.
“Japan should have far fewer photoresist makers because the market size is not big enough to keep all of them profitable,” Bloomberg Intelligence analyst Masahiro Wakasugi.
Takahashi said he’s ready to bet big on JSR should an opportunity present itself, although he may not be as bold as in the $7 billion deal he orchestrated for Hitachi Chemical Co. in 2020. At that time, Hitachi Chemical’s value was twice that of Showa Denko KK, Resonac’s precursor. JIC has said the fund will seek to sell JSR shares in five to seven years.
“As long as it’s a price that I can defend to our shareholders, I’m willing to explore various frameworks to make a deal happen,” Takahashi said.
The Tokyo-based company is a supplier of crucial materials used to make cutting-edge semiconductors that underpin artificial intelligence. The company, once known for traditional materials such as graphite, has been overhauling its business portfolio to focus on chip-related products, such as non-conductive film and thermal interface materials needed to yield reliable production of high-bandwidth memory.
