Japan Chip Linchpin Soars on $7 Billion Government Buyout Talk
(Bloomberg) -- JSR Corp., the largest maker of a compound essential to all chipmaking, surged by its daily limit after a report the government-backed Japan Investment Corp. may buy out the company for roughly ¥1 trillion ($7 billion).
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JIC is considering making an offer to the company as early as this year, the Nikkei newspaper reported over the weekend. JSR will discuss the matter in a board meeting on Monday and make an announcement once a decision is made, it said in a statement.
JSR rose 22% at the close, the most since since 1999, after remaining untraded most of the day as bids outweighed offers. Its peer Shin-Etsu Chemical Co. jumped 1.5% and Tokyo Ohka Kogyo Co. surged 9.1% to a record high. Other related chemical firms such as Toyo Gosei Co., Fujimi Inc., Tri Chemical Laboratories Inc. and Osaka Organic Chemical Industry Ltd. also advanced.
The move is designed to help preserve Japan’s national economic security by fostering materials essential to becoming more competitive in semiconductors, the newspaper said. Government control over materials critical for making powerful chips would offer Japan leverage in a world increasingly divided by escalating US-China technological tensions.
“We think the semiconductor materials business is becoming increasingly important as a matter of national policy,” SMBC Nikko analyst Go Miyamoto wrote in a note. Valuations for other semiconductor materials stocks will likely increase “if investors start to price in similar possible acquisitions.”
Market Share
JSR controls roughly 30% of the global market for photoresists and is one of three Japanese companies, along with Shin-Etsu and Tokyo Ohka Kogyo, to almost wholly control fluorinated polyimide and hydrogen fluoride — essential ingredients for the manufacture of displays and semiconductors.
If the takeover materializes as reported, “it would ease investing in photoresists and other semiconductor materials for JSR, potentially further enhancing its technical and cost competitiveness,” Miyamoto added.
Japan, which seeks to raise its own profile as a chip supplier, still commands leading market share in a number of little-known but essential parts of the chip supply chain — a legacy from when Japan led the world in semiconductor technology in the 1980s.
--With assistance from Mayumi Negishi.
(Updates share prices throughout)
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