Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

Media reported that Japan plans to provide billions of dollars to invite TSMC and other global chipmakers to build factories in Japan. In response to the news, TSMC today responded, saying it had no plans to build a factory at this time, but would not rule out any future arrangements. Although TSMC’s current response appears to deny the possibility of a short-term plant in Japan, it has not ruled out a future plant in Japan.

After all, TSMC has said many times before it announced the construction of a 5nm wafer foundry in the United States, but in just a few months, TSMC officially announced in May that it would build a 5nm fab in Arizona, usa, with an investment of $12 billion.

TSMC’s move to build a factory in the United States has also attracted the attention of Japan. Because, if we can attract the world’s leading wafer foundry TSMC advanced process plant in Japan, then it will certainly drive the development of the local advanced semiconductor manufacturing industry in Japan, but also will give the local semiconductor materials and equipment manufacturers in Japan to further enhance market share opportunities.

At present, Japan has a very strong position in the field of semiconductor materials. SEMI estimates that Japanese companies account for about 52% of the global semiconductor materials market, while North America and Europe account for about 15%.

Japan’s semiconductor materials industry has an absolute global presence in silicon wafers, photoresist, bonding leads, molded resins and lead frames and other important materials. Japan’s Shinyue, SUMCO (Mitsubishi Sumitomo Co., Ltd.), Sumitomo Electric Wood, Hitachi Chemical, Kyocera Chemical, etc. are the world’s semiconductor materials giants.

For example, in silicon, according to SEMI data, the top five suppliers in 2019 are Japan’s Shinjuh Chemical (29%), Japan’s SUMCO (Shenggao, 23%), Taiwan’s Global Wafers (16%), Germany’s Siltronic AG (12%) and South Korea’s SK Siltron (12%), with the top five combined accounting for 92% of the world’s market share. Japan’s Shinyue Chemical and SUMCO, two manufacturers, account for 52% of the global market.

Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

On target, the world’s top six manufacturers accounted for more than 90%, of which the top two are Japanese manufacturers Shin-Etsu and SUMCO, the combined market share of more than 50%.

In the photoresist, mainly includes PCB photoresist special chemicals (photo-triggerand agents and resin), liquid crystal display (LCD) photoresist photopromoter, semiconductor photoresist photoelectric agent and other uses of photoresist 4 categories. Currently, the main photoresists used in the semiconductor market include g-line, i-line, KrF, ArF four-class photoresist, of which g-line and i-line photoresist are the most used on the market.

The core technologies of KrF and ArF photoresist in use on the market are largely monopolized by Japanese and American companies. Among them, JSR Co., Ltd., Shin-Yu Chemical, Tokyo Chemical Industry, Fuji Electronic Materials, the four Japanese manufacturers accounted for 72% of the global market share.

Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

Japanese companies also dominate the high-purity hydrofluoric acid required for semiconductor cleaning and etching, with three Japanese companies, Stella Chemifa, Daijin and Morita Chemical, accounting for more than 93% of the global market share.

Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

In the CMP polishing market, the data show that the top five suppliers in 2017 are Cabot SE (36%), Dow Chemical (20%), Hitachi Chemical (15%), Fujimi (11%) and Versum (10%). Japan’s Hitachi And Fujimi together account for 26% of the market.

Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

It can be said that Japan has a high voice in the field of semiconductor materials.

Last year, when Japan imposed sanctions on South Korea, it had severed the export of three key semiconductor materials, photoresist, high-purity hydrofluoroic acid and polyimide fluoride, required in the semiconductor sector, much to the strain among South Korean semiconductor makers.

In addition, Japan is second only to the United States in the semiconductor equipment market.

According to the U.S. semiconductor industry research company VLSI Research published by sales ranking of the world’s top 15 semiconductor equipment manufacturers in 2019, the United States manufacturers accounted for four, and applied materials ranked first, Panlin Semiconductor ranked fourth, Christie ranked fifth, Terida ranked eighth, the overall strength of U.S. manufacturers is stronger.

Japan spent a lot of money to invite TSMC and other factories to Japan to build factories, what is the intention?

However, we can also see that among the top 15 semiconductor equipment manufacturers, the number of Japanese manufacturers reached eight, accounting for more than half. Among them, Tokyo Electronics, Edwan, Deans, Hitachi Gawker are in the top 10, and Japan is one of the very few countries in the world with the manufacturing capacity of lithography machines, Nikon and Canon is second only to ASML lithography giants.

Overall, Japan is the most complete and comprehensive in terms of the layout of the entire semiconductor industry chain relative to other countries. The only relatively weak link is the semiconductor manufacturing aspect of advanced processes.

Therefore, the Japanese government hopes to bring in leading fab manufacturers such as TSMC, and it is also to complement this ring and revive Japanese semiconductor manufacturing. At the same time, it will further promote the development of the semiconductor materials and semiconductor equipment industry in Japan, which is almost strong.