TSMC's Magnetic Pull: Decoding Japanese Global Photoresist Giant JSR's Strategy in Taiwan

(Central News Agency, reporter Zhang Jianzhong, Taipei, 10th) As the AI wave accelerates the iteration of advanced semiconductor processes, it is an indisputable fact that international materials giants face the risk of falling behind if they do not engage in immediate 'co-development' with TSMC. The conservative Japanese materials giant JSR is significantly expanding its investment in Taiwan. Behind this is not only the magnetic pull of TSMC's annual capital expenditure of US$56 billion but also the irreversible localization strategy of the US-Japan-Taiwan iron triangle ecosystem.

As is well known, ASML's lithography equipment is a crucial weapon for semiconductor fabs competing in advanced processes. However, without the key material 'photoresist' that turns stone into gold, even with a hundred-billion-dollar tool, it is impossible to etch nanometer-scale chip circuits onto silicon wafers.

For a long time, the global photoresist market has been a unique weapon for Japanese companies. JSR and Shin-Etsu Chemical are the top two globally. Adding Tokyo Ohka Kogyo (TOK) and Sumitomo Chemical, Japanese companies firmly hold over 80% of the global market share.

In 2019, Japan launched a trade war against South Korea, imposing strict export controls on key materials like photoresist, which are indispensable for producing chips and panels. This move severely impacted Korean tech giants like Samsung and SK Hynix, which are heavily dependent on Japanese raw materials.

This material, once used by the Japanese government as a 'strategic commodity' to check South Korea's semiconductor industry during the Japan-Korea trade war, is now seeing its key manufacturing and R&D centers rapidly shift towards Taiwan by giant JSR, driven by the growing semiconductor supply chain centered on TSMC.

In April of this year, a major tech event took place at the Hukou base adjacent to the Hsinchu Science Park. The 'Advanced Planarization Process Solution Joint Research Center,' established by JSR's subsidiary, Taiwan JSR Microelectronics Materials, and global semiconductor equipment leader Applied Materials Taiwan, was officially inaugurated. JSR President Tetsuro Hori personally attended the ceremony, underscoring the high importance Japan places on this global materials R&D deployment.

At the inauguration ceremony, a speech by TSMC's Vice President of R&D, Hsun-Ming Chang, clearly revealed the severe challenges behind advanced processes. As TSMC's first CMP engineer, he likened Applied Materials' equipment and JSR's slurry to kitchenware and ingredients, with TSMC as the chef. Only with perfect coordination among the three can Michelin-star-level cuisine be created. The joint research center is like a more advanced and complete new kitchen, allowing for more creativity and making more impossibilities possible.

Chang also highlighted the stringent challenges of CMP in current advanced semiconductor processes. The flatness requirement after polishing a 12-inch wafer must be within 1 nanometer. To put this abstract concept into perspective, he compared it to the unevenness of a baseball field being less than the thickness of a single hair, illustrating the extreme difficulty.

To address these major engineering challenges, Chang stated that the collaboration between TSMC, Applied Materials, and JSR on equipment, slurry, and materials will become increasingly close in the future. He noted that cross-border and cross-company cooperation is crucial, and this also bears witness to the trend of international giants developing semiconductor technology in Taiwan, as well as TSMC's determination to keep its roots in Taiwan.

In contrast to the high-profile inauguration of the joint research center in Hsinchu, JSR's other major move in the Huwei Park in Yunlin was remarkably low-key.

According to press releases from JSR, Wah Lee, and LCY Chemical, Taiwan JSR Advanced Manufacturing Co., Ltd. will become a manufacturing base for advanced electronic materials in Taiwan, establishing a stable supply system for the growing advanced semiconductor market. Details such as mass production timelines and capacity scale were not disclosed.

According to data from the Department of Commerce, Ministry of Economic Affairs, Taiwan JSR Advanced Manufacturing Co., Ltd. was quietly established in early April of this year with a paid-in capital of NT$1.17 billion. JSR invested NT$597 million to hold a majority stake and lead operations. LCY Chemical and Wah Lee hold approximately 39% and 10% stakes, respectively.

JSR is the largest shareholder of Taiwan JSR Advanced Manufacturing, holding a majority stake and leading its operations. Wah Lee stated that while JSR's future photoresist technology R&D center will remain in Japan, considering the conservative style of Japanese companies, JSR's willingness to co-produce photoresist in Taiwan represents a significant milestone in Japan-Taiwan cooperation.

LCY Chemical views this as a strategic alliance combining professional technology and distribution channels, which will strengthen JSR's global electronic materials business structure. Wah Lee pointed out that this will have a positive effect on the development of Taiwan's semiconductor industry.

The driving force behind this Japanese materials giant breaking its conventions and making a major move eastward is undoubtedly TSMC.

TSMC not only commands over 70% of the global wafer foundry market but also, to continuously advance process technology, packaging, and expand capacity, its annual capital expenditure has soared to an astronomical figure of nearly US$56 billion. This massive business opportunity cake created by TSMC has become a strategic core that global construction, facility, equipment, and materials companies must compete for.

Semiconductor industry experts analyze that JSR's expansion in Taiwan is an inevitable trend. It is a testament to TSMC's influence on the global supply chain and the resilience of Taiwan's supply chain. It is also a model of Taiwan-Japan-US cooperation, which will strengthen Taiwan's position in the world's most complete supply chain.

Experts point out that the iteration speed of artificial intelligence (AI) and advanced semiconductor technology is accelerating. Without rapid, real-time co-development of the latest processes with TSMC in Taiwan, companies face the risk of falling behind. Currently, only foreign companies that have localized in Taiwan and local Taiwanese companies have the opportunity.

Unlike Korean giants like Samsung, which habitually compete with or even try to replace Japanese materials companies through investment or M&A, TSMC has always focused on its foundry core business and does not easily intervene in the supply chain to compete with materials suppliers. It is precisely this trust foundation of 'not competing with customers and suppliers' that has created a golden iron triangle of 'Taiwanese manufacturing, American equipment, and Japanese materials,' where the three parties have high mutual trust and complementary interests.

In 2024, JSR was acquired and delisted by a Japan government-backed fund (JICC-02), shouldering the national mission of revitalizing Japan's semiconductor glory. Its current choice to take root, build a factory, and co-develop in Taiwan not only validates TSMC's immense influence over the global supply chain but also forges the world's most resilient and irreplaceable semiconductor technology defense line in Taiwan. (Editor: Lin Jiaxian) 1150610