“Japan's Chip Titans Go All In: The 2nm Era Is About to Begin !

Japan's three semiconductor giants are sparking an intense global race for production capacity, reflecting the anticipated competition in next-generation chip manufacturing processes. Tokyo Ohka Kogyo (TOK), JSR Corporation, and ADEKA, leading Japanese photoresist manufacturers, have recently announced multi-billion-yen investment plans, signaling a deep reshaping of the global semiconductor supply chain. These investments aim not only to compete with South Korea’s Samsung and SK Hynix but also to prepare for the surge in demand for advanced processes expected between 2025 and 2030.

Japanese companies hold an overwhelming monopoly in the photoresist sector. According to market data, Japanese firms account for over 91% of the global photoresist market, with Tokyo Ohka Kogyo (TOK) alone controlling 25.1% of the global market and 45.9% of the high-end EUV photoresist segment. TOK plans to invest ¥20 billion in a photoresist plant in South Korea, scheduled to begin production in 2030, and will add another ¥12 billion to build a high-purity chemicals plant. The dual-track investment strategy essentially relocates the supply chain closer to major customers, including semiconductor giants like Samsung and SK Hynix.

According to UBS research, Japanese photoresist companies are expected to maintain their advantage at least until 2030. Over the next five years, firms that control the photoresist supply chain will hold a decisive position in the global semiconductor industry.

JSR Corporation has an even more aggressive timeline: its MOR-type photoresist plant in South Korea is expected to start mass production by the end of next year, two to three years ahead of TOK. Meanwhile, the century-old Adeka adopts a “local-first” strategy, investing ¥3.2 billion in Japan to build an MOR-type photoresist plant, aiming for production by April 2028.

The Inevitability of South Korea as an Industry Hub

South Korea has become the preferred location for Japanese material giants to expand production, driven by multiple factors. In 2024, the South Korean government announced a major semiconductor cluster plan, investing $47.1 billion by 2047. The Pyeongtaek-Yongin region in Gyeonggi Province is set to become the world's largest chip manufacturing hub, targeting a monthly wafer capacity of 7.7 million. The area already hosts top global chipmakers such as Samsung and SK Hynix, leading to explosive demand for photoresists and other materials.

SK Hynix's capital expenditure this year rose by 75% to meet the surging demand for high-bandwidth memory (HBM) for AI chips, with HBM demand projected to grow 200% in 2024 and an additional 70% within the year. This demand surge directly translates into urgent needs for advanced photoresists. From a geopolitical perspective, Japanese material companies building plants in South Korea also mitigate trade friction risks, and local production reduces supply chain vulnerabilities.

According to the U.S. International Trade Commission, South Korea's semiconductor industry continues to increase its global competitiveness. Samsung's 2nm wafer foundry investment has already commenced, while SK Hynix's advanced DRAM 1b and 1c process expansion plans have been confirmed. These companies urgently need localized material suppliers to prevent potential bottlenecks in the global photoresist supply. Japanese investments in South Korea are therefore not merely factory construction but a long-term strategic link, ensuring that 2nm chip commercialization will not be constrained by material shortages.

Strategic Value of MOR Photoresists

MOR (Metal Oxide Resists) has emerged as the core choice for EUV (Extreme Ultraviolet) lithography, forming the rationale for Japan's current focused expansion. Compared to conventional chemically amplified resists (CARs), MOR has three major advantages :

1. Lower Material Costs – Approximately 33% cheaper than dry resists, attractive for cost-sensitive chips.

2. Superior Performance – Excels in resolution, line-edge roughness (LER), and pattern collapse, especially for ultra-small feature sizes.

3. Reduced Material Waste – Consumption can be reduced 5–10 times, meeting modern chipmakers' environmental requirements.

   
   

According to Tokyo Electron's investor report, MOR is expected to be used at 10 Å (1nm) for logic chips and in 1x nm processes for DRAM. Key industry players have already begun validating the commercial feasibility of MOR. SK Hynix has confirmed using MOR for 1x nm DRAM processes, and Samsung is conducting tests. Market research firm Valuates Reports projects the global EUV photoresist market to reach $296 million in 2024 and $1.409 billion by 2031—an almost fivefold growth over seven years.

Medium- and Long-Term Outlook for the Global Semiconductor Supply Chain

The current wave of Japanese expansion investments reflects a global consensus: chips below 2nm will transition from R&D to mass production within five to ten years. Data from the U.S. Department of Energy shows that the global semiconductor market will reach $1 trillion by 2030, with record-high demand for advanced process chips.

Although Japan lacks domestic 2nm chip fabs, its proactive overseas expansion demonstrates a determined strategy to dominate sub-2nm advanced processes. National support further strengthens this trend: Japan's Ministry of Economy, Trade, and Industry (METI) aids Japanese material companies in fine chemical R&D, while the U.S. government strategically supports Japanese material firms' expansion into Europe, enhancing their global competitiveness.

Emerging players like China have made progress in photoresist R&D and production, primarily for i-line and KrF photoresists. However, they still face significant technical and cost gaps in commercializing high-end EUV resists. Japanese firms are expected to maintain their EUV photoresist monopoly at least until 2030, reinforcing their expansion determination.

Profound Impact on the Industry Ecosystem

Japan's massive investments in photoresists will profoundly affect the global semiconductor supply chain distribution:

1. Strengthening South Korea as a Global Chip Manufacturing Center – Localized high-end materials will enhance Samsung and SK Hynix’s 2nm competitiveness and optimize cost structures.

   
   

2. Increasing Japan's Control over the Global Semiconductor Material Value Chain – In the post-Moore's Law era, chip performance improvements depend more on materials than process. By monopolizing key materials, Japanese companies hold the keys to industry upgrades.

   
   

3. Improving Supply Chain Resilience – Multiple production sites reduce the global chip industry's reliance on a single country's supply chain, while reinforcing Japan's strategic influence.

   Regardless of where chips are manufactured, Japanese materials and chemicals firms can profit, establishing a more stable “hidden champion” status than chip manufacturing capacity alone.

Conclusion and Outlook

The expansion wave of Japanese photoresist giants marks a new stage for the semiconductor industry. The competition is no longer limited to process technology and manufacturing scale but has shifted to upstream material supply chains. The investments clearly indicate that in the post-Moore's Law era, companies controlling key materials hold greater strategic advantages than those controlling processes.

For China and other emerging chip industry participants, this is a clear warning: without breakthroughs in materials, even the most advanced processes will be constrained by upstream limitations.

Source of Information: Tech News