Recent spillover of geopolitical risks has once again subjected the global semiconductor industry chain to severe tests. Multiple Japanese chemical suppliers have issued warnings to downstream chip manufacturers indicating signs of interruption in key photoresist solvent supplies. Storage giants such as Samsung Electronics and SK Hynix are among those affected. Industry sources indicate that relevant supply cut notifications emerged in late April. Involved companies are expected to formally explain the situation to customers shortly. The market generally fears this shortage effect will spread further upstream and downstream along the industry chain.
The root of this crisis traces back to the rupture of the energy supply chain triggered by escalating tensions in the Middle East. As a major producer of semiconductor materials, Japan relies on the Middle East for approximately 40 percent of its naphtha imports. With transport through the Strait of Hormuz impeded, naphtha prices surged from around US$600 per ton prior to the restrictions to US$1,190, nearly doubling. Naphtha is a critical raw material for producing basic chemical feedstocks such as ethylene and propylene. Tight supply has forced Japanese cracking units to cut production, consequently compressing output of propylene and propylene oxide. Since core solvents PGME and PGMEA are manufactured from propylene oxide, upstream energy fluctuations transmitted through the chemical chain ultimately triggered the semiconductor photoresist material supply crisis.
Cost pressures are rapidly transferring downstream. Currently, PGMEA market prices have risen by approximately 50 percent. Multinational chemical giants including DuPont, Dow, and LG Chem have successively issued price increase notices. Local Korean diluent suppliers such as Dongjin Semichem and Dongwoo Fine-Chem also plan to raise prices for April shipments by about 20 percent to pass on costs. For chip manufacturers, finding alternative solutions in the short term is extremely difficult. Although Japanese suppliers are assessing the possibility of procuring substitute raw materials from China or Korea, strict process change certification is required. Photoresist materials are formula-based chemicals with complex validation processes, typically taking around one year to complete re-verification and switching. This implies the industry cannot easily find a quick solution in the short term.
Facing external supply chain uncertainty, related domestic enterprises are accelerating technical breakthroughs and domestic substitution. Shengqun Group has achieved mass production of phenolic resins for G-line and I-line photoresists and launched multiple photoresist adhesive products for chip packaging. Colorlink Technology has established China’s first 100-ton-level semiconductor KrF photoresist resin production line and completed certifications for multiple clients. Tongcheng New Materials has covered the full process from lithography to packaging through its subsidiaries and achieved mass production of a series of PHS resins. Although shocks brought by international geopolitical conflicts continue and various links in the industry chain face significant pressure, progress by domestic companies in key material fields provides new possibilities for alleviating future supply risks.
