Japan Makes ~90% of the World's Photoresist — The Chip Industry's Other Chokepoint

In Japan's Semiconductor Equipment Makers, Mapped we looked at Japan's strength in chipmaking machines. But Japan has a second stronghold: materials. If equipment is the toolset that builds chips, materials are what chips are actually made of. For the full picture of the industry, see our semiconductor beginner's roadmap (in Japanese).

Why is Japan so strong in materials?

In semiconductor materials, even the slightest impurity has an outsized effect on yield — the share of chips that come out defect-free. On leading-edge chips, a handful of invisible particles can render an entire wafer defective. Materials therefore demand extreme purity and rock-solid consistency, and that level of process refinement cannot be replicated overnight.

Japanese companies spent decades building up this purity and reproducibility. Unlike equipment, which is purchased one machine at a time, materials are consumables — used up in every production run. Stable supply and trust are therefore decisive, and once a supplier is qualified, customers rarely switch. This is the root of Japan's strength.

What is photoresist, and who controls it?

Photoresist is a light-sensitive chemical coated onto the wafer so that circuit patterns can be printed during exposure (lithography). It exploits the fact that light changes the properties of the illuminated areas, allowing the circuit's shape to be carved out. Without it, even the finest lithography machine (in Japanese) cannot print a single circuit.

Japanese suppliers are estimated to hold roughly 90% of the global photoresist market. Tokyo Ohka Kogyo (TOK), JSR, Shin-Etsu Chemical and Fujifilm are the leading players, and resist for leading-edge EUV lithography in particular is a domain with extremely high technical barriers. Each company is accelerating resist investment for the 2nm generation (TrendForce).

Who makes silicon wafers?

The disc that forms the foundation of every chip is the silicon wafer — a mirror-flat silicon plate, 300mm in diameter, on which the circuits are built. Because surface flatness, purity and crystal perfection directly determine yield, manufacturing wafers is exceptionally difficult.

Here too Japan leads: Shin-Etsu Chemical and SUMCO are the world's top two suppliers. Together they are estimated to hold a majority of the global market, with some tallies putting the top five suppliers at around 90% (estimates vary by source). Scaling up wafer diameter while pushing purity ever higher forms the barrier to entry, and virtually no new entrants have appeared (Mordor Intelligence and others).

What does this materials dominance mean?

By controlling materials on top of equipment, Japan holds a double grip on the upstream chokepoints of the semiconductor supply chain. Just as the United States controls EDA (chip design software, in Japanese) and the Netherlands controls EUV lithography (in Japanese), Japan occupies a position in equipment and materials that is very hard to substitute.

This structure also translates into negotiating leverage for Japan in export controls and economic security. Japan's growth strategy for semiconductors (in Japanese) is built on this solid equipment-and-materials foundation. From an investment perspective, materials companies are rarely flashy, but because their products are consumables, demand is stable and relatively resilient to economic cycles. This article is not investment advice (U.S. Department of Commerce / trade.gov).

Key takeaways

• Chips cannot be made with equipment alone — they require materials such as photoresist, silicon wafers and polishing slurries.
• Japanese suppliers (TOK, JSR, Shin-Etsu, Fujifilm) are estimated to hold roughly 90% of the global photoresist market.
• In silicon wafers, Shin-Etsu Chemical and SUMCO lead the world and are estimated to hold a majority of the market (estimates vary by source).
• Because trace impurities determine yields, decades of purity engineering make these businesses hard to imitate.
• Holding both equipment and materials, Japan sits on an irreplaceable chokepoint in the semiconductor supply chain.