Japan-backed fund to buy chip materials maker JSR for $6.4 bn
Published: 04:06 PM,Jun 26,2023 | EDITED : 08:06 PM,Jun 26,2023
TOKYO: Japan stepped up efforts to bolster its chip industry on Monday, with a government-backed fund agreeing to buy semiconductor materials maker JSR Corp for about $6.4 billion.
The move by Japan Investment Corp (JIC), overseen by the powerful trade ministry, is the latest in a series of increasingly muscular government steps to try to regain Japan's lead in advanced chip production and maintain its edge as a maker of materials and tools used in their manufacture.
JIC plans to launch a tender offer in late December offering 4,350 yen per share, a 35% premium to Friday's closing price, to take JSR private. Mizuho Bank and the government-backed Development Bank of Japan (DBJ) will provide financing.
JSR shares rose by 22%, their daily limit, ahead of the official announcement. The news raised expectations of sector consolidation, driving shares in peer Tokyo Ohka Kogyo 10% higher, while Sumitomo Chemical and Shin-Etsu Chemical each rose 2%.
'Capabilities here are superb, but there are a lot of us and all of us are spending money redundantly, so we feel the opportunities for efficiency gains are significant,' JSR CEO Eric Johnson told a news conference.
Johnson, a rare foreign-born head of a Japanese company, said he aimed to relist the company in five to seven years.
JSR is a top supplier of photoresists, which are light-sensitive chemicals used to etch patterns on wafers.
'Japan has a monopoly, with China and others yet to develop this technology,' said Kazuhiro Sugiyama, consulting director at research firm Omdia.
JSR approached JIC about potential backing, an industry ministry official said.
JSR needs to invest heavily in production capacity and the development of materials for advanced chip manufacturing, said the official, who declined to be named because they are not permitted to speak with media.
'We felt a strong sense of crisis from JSR management that the Japanese chip materials industry would eventually lose to overseas rivals,' Shogo Ikeuchi said, the chief executive of JIC's private equity fund. 'Their thinking was perfectly aligned with our fund's purpose, which is to promote industry consolidation.'
While Japan has a long and mixed record of intervening to save floundering industrial players, the move to buy a profitable company that has already undergone restructuring risks criticism for potential overreach. — Reuters
The move by Japan Investment Corp (JIC), overseen by the powerful trade ministry, is the latest in a series of increasingly muscular government steps to try to regain Japan's lead in advanced chip production and maintain its edge as a maker of materials and tools used in their manufacture.
JIC plans to launch a tender offer in late December offering 4,350 yen per share, a 35% premium to Friday's closing price, to take JSR private. Mizuho Bank and the government-backed Development Bank of Japan (DBJ) will provide financing.
JSR shares rose by 22%, their daily limit, ahead of the official announcement. The news raised expectations of sector consolidation, driving shares in peer Tokyo Ohka Kogyo 10% higher, while Sumitomo Chemical and Shin-Etsu Chemical each rose 2%.
'Capabilities here are superb, but there are a lot of us and all of us are spending money redundantly, so we feel the opportunities for efficiency gains are significant,' JSR CEO Eric Johnson told a news conference.
Johnson, a rare foreign-born head of a Japanese company, said he aimed to relist the company in five to seven years.
JSR is a top supplier of photoresists, which are light-sensitive chemicals used to etch patterns on wafers.
'Japan has a monopoly, with China and others yet to develop this technology,' said Kazuhiro Sugiyama, consulting director at research firm Omdia.
JSR approached JIC about potential backing, an industry ministry official said.
JSR needs to invest heavily in production capacity and the development of materials for advanced chip manufacturing, said the official, who declined to be named because they are not permitted to speak with media.
'We felt a strong sense of crisis from JSR management that the Japanese chip materials industry would eventually lose to overseas rivals,' Shogo Ikeuchi said, the chief executive of JIC's private equity fund. 'Their thinking was perfectly aligned with our fund's purpose, which is to promote industry consolidation.'
While Japan has a long and mixed record of intervening to save floundering industrial players, the move to buy a profitable company that has already undergone restructuring risks criticism for potential overreach. — Reuters