As Beijing targets Tokyo over Takaichi’s Taiwan remarks, what levers does Japan have?
Japanese control of chemical used in semiconductors could prove significant, analysts say
China’s access to Japan’s coveted industrial-use goods – especially a critical chipmaking ingredient – may face hurdles if Tokyo imposes export restrictions in the event of a prolonged political dispute, though trade is holding steady for now, analysts and a trade organisation said.
Analysts highlighted Japan’s dominance in certain chemicals – especially photoresist, a light-sensitive material used to engrave chips – as a potential source of leverage against Beijing.
“Japan can stop exporting important goods such as semiconductor manufacturing equipment,” said Minoru Nogimori, senior economist for Asia at the Japan Research Institute. “Semiconductor manufacturing equipment and chemicals should be important cards.”
Four Japanese companies – JSR, Tokyo Ohka Kogyo, Shin-Etsu Chemical and Fujifilm Electronic Materials – controlled 72.5 per cent of the global photoresist market in 2021, ResearchInChina found. Chinese domestic substitution, meanwhile, is estimated at below 5 per cent, according to market research firm TrendForce.
Some Asian media outlets reported last month that Japan was already poised to introduce restrictions on photoresist exports.
Japanese companies in China are generally continuing to operate as they have in the past
China’s market for the material is worth 12.3 billion yuan (US$1.75 billion), but domestic producers lack the capacity to replace Japanese suppliers. Any disruption would likely accelerate Beijing’s long-standing push for home-grown substitution across the tech supply chain, analysts said.