Japan kind-of nationalizes key chipmaking material-maker JSR
If the US or Europe dare criticize this deal, it would be rank hypocrisy
The government of Japan's investment vehicle will acquire JSR Corporation, a key provider of chipmaking products and expertise.
JSR specializes in lithography materials, chemical-mechanical planarization materials, process materials, and packaging materials – all of which are used to make semiconductors. The firm also provides material for the manufacture of LCD panels and has a life sciences division. Annual revenue was just over $2.5 billion in FY2022.
On Monday the Japan Investment Corporation (JIC) announced [PDF] a $6.3 billion bid for JSR at a 141 percent premium over its current share price.
JIC is a joint venture between Japan's government and 25 local industry giants, formed to address the nation's dearth of risk capital. Its mission is to "generate a virtuous cycle of risk capital to support next-generation industries in Japan."
The government hopes semiconductors might become one of those rising industries. Like almost every other nation on Earth, Japan has realized that chips are big business and have enormous strategic significance. Recent policy shifts have emphasized restoring Japan's semiconductor industry to global prominence, while strengthening local supply chains.
Which is why JIC's announcement bluntly offers the following explanation for its acquisition tender:
Semiconductors are used in every corner of the world, and there is fierce global competition for their acquisition, development, and manufacturing. Semiconductor materials are critical to the success of their development and manufacturing, and enhancing the international competitiveness of the semiconductor materials industry is important in strengthening Japan's industrial competitiveness.
The announcement adds that the acquisition is intended to "enable JSR to smoothly and rapidly promote its bold, medium-to-long-term strategic investments without being bound by the short-term impact on business performance."
The document also states: "This initiative will provide an opportunity for industry reorganization and acquisition of private funds to strengthen the international competitiveness of the semiconductor materials industry."
Subtle, it is not.
JRS provided an opinion [PDF] to its investors in which directors strongly recommend the acquisition proceed, because it will accelerate the board’s vision and "Reinforce [our] position in Japan's semiconductor materials sector by promoting industry restructuring."
The opinion also points out that as JIC is government-aligned, it can "provide large-scale, long-term, neutral risk capital in the midst of an uncertain economic environment."
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That sort of government backing usually annoys other nations. But with Europe and the United States each throwing billions at their own semiconductor industries, any international criticism of this deal will struggle to be taken seriously.
Also on Monday, South Korea's ministry for trade, industry, and energy announced it will create a ₩300 billion ($229.25 million) fund to help fabless semiconductor companies scale up.
First vice minister Jang Young-jin said the fund is needed to ensure local firms can compete in the fierce market for semiconductors. ®