On July 28, 2026, Tokyo — Amid sustained high global chip demand, several leading Japanese semiconductor material companies issued expansion announcements today, planning to invest over 1.2 trillion yen in new plants and production line upgrades over the next two years. This move is seen by the industry as a key signal of Asia-Pacific semiconductor supply chain restructuring, extending from traditional wafer foundry and IC design upstream into materials.
Material Shortage Drives Expansion
According to the latest Semico report, the global semiconductor material market surged 18% year-on-year in Q2 2026 to a record $14.5 billion. Categories such as photoresist, high-purity chemical gases, and advanced packaging substrates face supply shortages, with lead times generally extending beyond six months. As the world's major supplier of semiconductor materials, Japan's Shin-Etsu Chemical, Tokyo Ohka Kogyo, and Sumitomo Chemical are all on the expansion list.
Shin-Etsu Chemical announced it will build the world's largest extreme ultraviolet (EUV) photoresist production base in Kumamoto Prefecture, expected to begin operations in 2028, boosting global EUV photoresist capacity by 30%. Tokyo Ohka Kogyo plans to expand its high-purity chemical gas plant in Fukuoka Prefecture, focusing on meeting demand from TSMC and Samsung Electronics in the Asia-Pacific region.
Supply Chain Focus Shifts Upstream in Asia-Pacific
For a long time, the Asia-Pacific semiconductor industry chain has centered on wafer foundry and IC design. However, recent intensifying US-China tech rivalry and Japan's export controls on semiconductor materials have prompted more chipmakers to seek localized material supply. Analysts note that self-reliance in materials has become a priority for national semiconductor strategies.
South Korea's Samsung Electronics and SK Hynix have signed long-term supply agreements with Japanese material makers and pledged financial support for expansion. Meanwhile, Chinese domestic material firms are accelerating their catch-up but still lag 2-3 generations in high-end photoresist.
Investment Opportunities and Risks
For investors, the semiconductor materials sector is emerging as a new focus for cross-market allocation. Related stocks on the Japanese stock market have posted an average gain of 45% year-to-date, with P/E ratios at historical highs. However, geopolitical risks cannot be ignored: if Japan further tightens export controls, trade friction may arise, impacting global chip supply.
OceanRing's Asia-Pacific financial research team believes investors should focus on Japanese material companies with technological barriers and diversified customer bases, while monitoring alternative progress in China and South Korea. In the short term, expansion capex will benefit equipment suppliers; in the medium to long term, it depends on technology iteration speed and market demand changes.
Industry Outlook
An official from Japan's Ministry of Economy, Trade and Industry stated that the government will designate semiconductor materials as a national strategic resource, supporting expansion through subsidies and tax incentives. It is expected that Japan's share of the global semiconductor material market will rise from the current 52% to over 60% by 2030.
This expansion wave is just a microcosm of the Asia-Pacific semiconductor supply chain upgrade. As chip process nodes advance to 2nm and beyond, material innovation will play a decisive role. Whether wafer foundries, IC design firms, or material suppliers, only coordinated deployment can capture the growth dividends of the next decade.
