Tech war: China reliance on chemical in chip manufacturing causes ripples as Japan mulls how to respond to updated US controls
- Chinese investors have been scrambling to buy companies that are able, or have the potential, to produce photoresist
- Tokyo has yet to make a decision on restricting photoresist sales to China but some investors are already positioning for this outcome
China’s reliance on Japan for a special chemical used in making chips is causing ripples as Tokyo considers how to respond to the latest update of US export controls against China’s semiconductor industry, experts say.
Chinese investors have been scrambling to buy companies that are able, or have the potential, to produce photoresist that can be substituted for Japanese products even though there has been no official announcement from Japan about restricting photoresist sales to China.
Photoresist is a light-sensitive material used in several processes, such as photolithography and photoengraving, to form a patterned coating on a surface, and is a key input in semiconductor manufacturing.
Jiangsu Nata Optoelectronic Material Co, which develops a type of photoresist, gained 13 per cent to to 34.31 yuan per share, while Crystal Clear Electronic Material Co, which produces ultra-pure materials for Semiconductor Manufacturing International Corp, ChangXin Memory Technologies, and Hua Hong Semiconductor, gained 7.3 per cent since Monday to 17.71 yuan.
Shenzhen Rongda Photosensitive & Technology Co and Shenzhen Tongyi Industry Co, which both specialise in chemicals that can be used in a number of areas including chip manufacturing, both surged 20 per cent on Tuesday.
However, while China has made progress in producing photoresist, it still relies on imports, mainly from Japan, to produce advanced products, according to a chip industry investor, who declined to be named due to the sensitivity of the subject.