Japan’s State Fund Weighs Sale of JSR as AI Boom Drives Chip Material Valuations
Japan Investment Corp (JIC), the state-backed fund that took chipmaking materials maker JSR private in a $6 billion deal roughly two years ago, is now considering selling the company, according to two people familiar with the matter, Reuters reported on Thursday, May 28. Fujifilm and Mitsubishi Chemical have both expressed interest in acquiring JSR, the sources said, declining to be identified because the information had not been made public. No sale price or timeline has been disclosed.
Massive investments in artificial intelligence have lifted the valuations of chip supply chain firms, and JIC — which had aimed to use JSR to drive industry consolidation in the materials sector — is now looking to take advantage of those buoyant market conditions to sell, according to one of the people. Investing.com
JSR, established in 1957, is a leading manufacturer of photoresists — light-sensitive chemicals used to transfer circuit patterns onto semiconductor wafers. According to Nomura Securities, JSR holds roughly 27% of the global photoresist market, making it the world’s largest manufacturer in that segment. Investing.comDIGITIMES
JIC, Fujifilm, and Mitsubishi Chemical declined to comment. JSR did not respond to a request for comment. WTAQ News Talk
Fujifilm’s shares on Thursday extended gains after publication of the Reuters report and finished 3% higher, while shares in Mitsubishi Chemical pared losses and closed flat. WTAQ News Talk
The two potential buyers are not unfamiliar with the photoresist sector. Fujifilm also manufactures photoresists, while Mitsubishi Chemical produces chemicals that go into photoresists. A deal would therefore consolidate overlapping operations under a single Japanese corporate umbrella rather than introduce a new entrant to the market. Investing.com
When JIC initially pursued JSR in 2023, Shogo Ikeuchi, the chief executive of JIC’s private equity fund, told Reuters: “We felt a strong sense of crisis from JSR management that the Japanese chip materials industry would eventually lose to overseas rivals. Their thinking was perfectly aligned with our fund’s purpose, which is to promote industry consolidation.” StreetInsider
That consolidation ambition, however, ran into operational headwinds after the go-private deal was completed. At the time of the acquisition, JSR had argued that taking the company private would free it from managing its foreign investor base and enable it to pursue acquisitions. But some in the industry questioned whether JSR could successfully clinch deals that would reshape the materials sector. Investing.com
JSR’s new chief executive said last year that he was focused on restoring the company’s business performance and that it was not ready to make acquisitions. That shift in priorities effectively shelved the consolidation thesis that had justified the original deal. WKZO
Financially, JSR has stabilised. It logged a net profit of 60.7 billion yen ($380 million) on 400.7 billion yen of revenue in the year ended March, returning to profitability after being pulled down by its life sciences business the year before. The return to profit, combined with surging sector valuations, appears to have created the conditions JIC needs to pursue an exit. Investing.com
Kazuhiro Sugiyama, consulting director at research firm Omdia, said at the time of JSR’s original acquisition: “Japan has a monopoly, with China and others yet to develop this technology.” That strategic position has only grown more consequential as the United States and its allies, including Japan, have moved to restrict the export of advanced chipmaking tools and materials to China. StreetInsider
Regional and Global Impact
Japan has numerous companies making niche but essential chipmaking materials and equipment, many of which have seen their valuations surge amid the AI boom. Shares in photoresist maker Tokyo Ohka Kogyo, for example, have tripled over the past year, giving it a valuation of 1.4 trillion yen. Investing.com
A sale of JSR to either Fujifilm or Mitsubishi Chemical would consolidate a significant portion of the global photoresist supply under a larger Japanese conglomerate, potentially reshaping the competitive structure of the sector. Japan-based Shin-Etsu Chemical, Sumitomo Chemical, and Fujifilm currently combine with JSR to hold approximately 90% of the global photoresist market. A merger with any one of those players would further concentrate that dominance. DIGITIMES
For the broader semiconductor supply chain, the outcome matters beyond Japan’s borders. Photoresists are an indispensable input for every leading-edge chip fabrication facility in the world, including those operated by TSMC, Samsung, and Intel.
Background
JIC, which is overseen by Japan’s trade ministry, was set up in 2018 to invest in companies with the goal of boosting Japan’s competitiveness. The fund is a joint venture between Japan’s government and 25 local industry giants, formed to address the nation’s shortage of risk capital. JIC launched its tender offer for JSR in late 2023, offering 4,350 yen per share — a 35% premium over the prevailing market price at the time — in a deal valued at approximately $6.3 billion. The acquisition was completed and JSR was delisted by mid-2024. JIC has also invested in medical equipment maker Topcon alongside private equity firm KKR. Investing.com + 2
What Happens Next
Reuters reported that the consideration of a sale is at an early stage and no formal process has been launched. JIC, Fujifilm, and Mitsubishi Chemical have all declined to confirm the discussions publicly, meaning any transaction would require formal confirmation before terms could be negotiated. Should JIC proceed, a sale process would likely involve regulatory review by Japan’s trade ministry, which oversees JIC directly. No timeline for a decision or a binding offer has been disclosed by any of the parties involved.
