Mitsui Chemicals invests $11.6 billion in chip materials with JSR deal
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Mitsui Chemicals has agreed to buy JSR, one of Japan’s leading makers of semiconductor materials, from state-backed Japan Investment Corp (JIC) for about 1.84 trillion yen, or roughly $11.6 billion. The Development Bank of Japan (DBJ), another state-backed institution, will put 200 billion yen into the deal.
Announced on Nov. 9, the acquisition would be the largest in the history of Japan’s chemicals sector, overtaking Showa Denko’s purchase of Hitachi Chemical in 2020.
JSR is best known for photoresists, the light-sensitive materials used to transfer circuit patterns onto silicon wafers during chipmaking. Every new generation of chips with smaller features demands more precise photoresists, and only a handful of companies can make them at the purity and consistency chipmakers require. These materials go into the advanced chips that power AI and data centers, and the deal puts one of the most strategically important links in the chip supply chain under a larger Japanese owner.
Investors were less convinced. Mitsui Chemicals’ shares fell 8.5% on the day of the announcement.
Japan is using state capital to consolidate chip materials
The deal is the latest chapter in a project the Japanese state began 2 years ago.
JIC bought JSR in 2024 for about 900 billion yen, roughly half the price Mitsui is now paying, saying at the time that it wanted to use the company to drive consolidation in semiconductor materials. The sale to Mitsui fits that aim and Japan’s wider effort to strengthen its position in the global chip supply chain.
Reuters reported in May that JIC was considering a sale, and talks with 7 or 8 potential buyers followed. Reuters later identified Mitsui as the final buyer in the week before the announcement, and its shares had already started to slide. JIC is now selling after the AI boom lifted valuations across chip-related businesses.
The state’s involvement does not end with the sale. DBJ’s 200 billion yen investment will be converted into non-voting preferred shares, giving the government-backed lender an economic stake without a say in how the business is run.
JIC CEO Shogo Ikeuchi was frank about the work still ahead, saying “simply having these materials does not mean they can immediately generate significant synergies.” He added that combining technology, talent, and business foundations could create new growth opportunities.
Mitsui Chemicals is reshaping its portfolio around chips
For Mitsui Chemicals, the deal is about more than adding a semiconductor business. CEO Satoshi Ichimura described it as “a strategic deal to accelerate the transformation of our portfolio.”
That transformation leans toward higher-value electronic materials. Mitsui expects the combination to add about 40 billion yen in annual profit, and it plans to sell JSR’s life sciences unit and other noncore operations to sharpen the focus on chip materials.
The approach mirrors a broader trend among chemical makers, which have spent years shifting away from commodity products toward specialty materials with higher margins and closer ties to fast-growing industries. Semiconductors are among the most attractive of those markets, because chipmakers need materials that meet exacting standards and tend to stay with qualified suppliers for long periods.
Financing the deal leaves little room for error
The financing is what worried the market. Mitsui Chemicals had a market value of about 664.6 billion yen before the announcement, far less than the price it is paying.
To fund the purchase, Mitsui plans a bridge loan of 1.64 trillion yen, partly repaid by selling up to 150 billion yen in new shares. It will also use bank loans, bond issues, and mezzanine financing, and it aims to restore a sound financial position within 3 years.
That 3-year target is the real test. Photoresist demand follows chip production, and the AI spending that lifted JSR’s value has yet to show how long it will last. Mitsui has not given a closing date or a timeline for regulatory approvals. Whether the bet pays off will depend on how long AI-driven chip demand holds up, how much the noncore sales bring in, and how quickly Mitsui can bring its debt back under control.
Source
Reuters (via The Star)
