Japanese chemicals company sees potential niche in EUV chip making materials

Little known even in its home country, Osaka Organic has carved out a critical niche in the semiconductor industry by supplying companies that make photoresists, the light-sensitive chemicals used to etch patterns on wafers.

It already has a 70% share of the market for the argon fluoride (ArF) monomers used in photoresists and now aims to grow in chemicals for EUV resists – an area becoming increasingly important as the global semiconductor industry is seen doubling in value in the decade to 2030.

“I am confident that we can compete,” Masayuki Ando, Osaka Organic’s president, told Reuters in an interview, referring to the EUV resist market.

In many ways, Osaka Organic is emblematic of Japan’s chip-making industry today. The world’s third-largest economy was once a global giant in making chips before ceding dominance to U.S., Taiwanese and South Korean rivals.

But Japan still retains a lockhold on crucial parts of the supply chain, such as chip-making tools and materials including specialised chemicals prized for their purity.

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The government, however, wants to see a bigger footprint for the industry with backing for chip foundry venture Rapidus and foreign chipmakers such as TSMC locating production in Japan. Last month JSR Corp, a leading photoresist maker, announced a plan to go private with investment from a government-backed fund driving speculation about potential consolidation in the sector.

Ando said that the competitiveness of Japan’s material makers did not depend on size. “For materials it’s not about chasing scale to reduce costs but about technical ability,” he said.

Companies without technical ability “will be weeded out naturally,” he said.

The company’s shares have gained 40% year-to-date.

“(Osaka Organic’s) EUV business is ramping up right now so it can outperform the growth ratio of the EUV photoresist market itself,” said Yuta Nishiyama, an analyst at Citigroup, who forecasts a market compound annual growth rate of 30-40%.

($1 = 141.5000 yen)