Rumors of Japan Halting Photoresist Exports to China: A Potential Shift in the Semiconductor Supply Chain?
Editor
A new geopolitical factor has emerged in the semiconductor industry. With news that Japan might halt exports of photoresist, essential for semiconductor manufacturing, to China, new tensions are forming within the global semiconductor supply chain. Personally, I believe this issue will present a far more complex scenario than a simple trade dispute.
While the material known as photoresist might be unfamiliar to the general public, it plays an absolutely crucial role in the semiconductor manufacturing process. It is a photosensitive chemical used in the photolithography process to form circuit patterns on wafers, without which modern sophisticated semiconductor chips cannot be produced. Particularly in cutting-edge 7-nanometer and 5-nanometer processes, extreme ultraviolet (EUV) photoresist is indispensable, and Japanese companies hold an overwhelming market share in this field.
As of December 2025, the global photoresist market is almost monopolized by Japanese companies. The top three Japanese photoresist manufacturers, Shin-Etsu Chemical, Tokyo Ohka Kogyo (TOK), and JSR, account for over 85% of the global market. Specifically, for EUV photoresist, Japanese companies are known to hold over 90% of the market share. This dominance is due to decades of accumulated chemical technology and patent barriers, making it a sector not easily replaced, which is why the potential export halt could have significant repercussions.
Looking at the current state of China’s semiconductor industry helps to better understand the severity of this issue. China is currently striving for semiconductor self-sufficiency, centered around SMIC (Semiconductor Manufacturing International Corporation), but still heavily relies on overseas sources for a substantial portion of its key materials and equipment. Particularly for photoresist, China’s domestic production capacity is very limited, resulting in a high dependency on imports from Japan.
A New Turning Point in the Semiconductor Supply Chain
If the rumors of halting photoresist exports become a reality, the impact is unlikely to be confined to China alone. Given the already complex entanglement of the global semiconductor supply chain, blocking the supply of a key material could trigger a worldwide chain reaction. In fact, when Japan regulated exports of semiconductor materials like photoresist to South Korea in 2019, it caused significant disruptions in the global memory semiconductor market.
At that time, Samsung Electronics and SK Hynix overcame the crisis by securing inventory and diversifying supply lines, but the uncertainty persisted for about six months, causing a sharp rise in memory semiconductor prices. Considering that the memory semiconductor market size is approximately $120 billion as of 2025, if a similar situation arises in the massive Chinese market, the ripple effect is expected to be much larger.
What is intriguing is the timing of this issue. As the U.S. tightens semiconductor export controls to China, Japan is also seen as potentially taking similar measures. This may not be a mere coincidence. With the U.S., Japan, and the Netherlands forming a trilateral cooperation system to restrict the export of semiconductor-related technologies and equipment to China, it is highly likely that photoresist is being discussed within this framework.
In fact, since 2023, the U.S. has restricted the export of not only ASML’s EUV equipment but also DUV equipment to China. ASML, headquartered in Veldhoven, Netherlands, is the world’s only manufacturer of EUV equipment, without which advanced semiconductor production is impossible. If Japan also halts photoresist exports, it is expected to impose significant constraints on China’s semiconductor technology development.
Corporate Response Strategies and Market Impact
The response of semiconductor companies in various countries to the rumors of halting photoresist exports is drawing attention. For Japanese companies, while it may be a factor for short-term revenue decline, it could actually present an opportunity in the long term. They could solidify their market share in other regions instead of the Chinese market, and also expect price increases due to supply shortages.
For instance, Shin-Etsu Chemical’s semiconductor photoresist sales are expected to reach about 350 billion yen in 2024, with a significant portion attributed to the Chinese market. However, the company has already secured long-term supply contracts with Taiwan’s TSMC, South Korea’s Samsung Electronics, and SK Hynix, which could offset the loss from the Chinese market to some extent. Particularly, TSMC plans to start mass production of the 2-nanometer process in the second half of 2025, which requires even more sophisticated EUV photoresist.
On the other hand, Chinese semiconductor companies may face serious challenges. SMIC is currently focusing on developing the 7-nanometer process, but if photoresist supply is halted, these plans will inevitably face setbacks. Despite the Chinese government’s investment of about $140 billion from 2014 to 2024 for semiconductor self-sufficiency, there remains a significant technological gap in key material sectors.
For Korean companies, a complex impact is anticipated. Samsung Electronics and SK Hynix have significant production facilities in China, so if the photoresist supply halt becomes a reality, it could disrupt production in China. Samsung’s Xi’an NAND flash plant and SK Hynix’s Wuxi DRAM plant both rely on Japanese photoresist. However, these companies have significantly strengthened their supply diversification and inventory management capabilities through the experience of Japan’s 2019 export restrictions, so the short-term impact is expected to be limited.
From a global perspective, this issue is likely to accelerate the de-China-ization of the semiconductor supply chain. Many global companies are already relocating their production bases to Southeast Asia or India to reduce dependence on China, and the halt in photoresist supply seems to further fuel this trend. Especially fabless companies like Apple and Qualcomm will likely be more cautious in considering Chinese companies when selecting contract manufacturers.
Market experts warn that if the photoresist export halt becomes a reality, the global semiconductor market could see a recurrence of supply shortages. A situation similar to the supply chain disruptions caused by COVID-19 in 2021 could occur. At that time, the shortage of automotive semiconductors reduced global automobile production by about 10%, and consumer electronics prices rose significantly.
However, personally, I believe this situation will differ from the 2019 Korea-Japan conflict. Unlike then, current geopolitical tensions are much more complex, and China’s determination for semiconductor self-sufficiency has grown stronger. The Chinese government is likely to allocate more resources to domestic photoresist production, which could eventually alter the monopoly structure of Japanese companies in the long term.
In fact, China is already investing significantly in photoresist research and development, centered around institutions like Beijing University of Technology and Huazhong University of Science and Technology. Although they currently do not match the technological level of Japanese companies, given enough time and resources, they could catch up to some extent. Particularly in relatively mature technology areas like ArF (argon fluoride) photoresist, Chinese companies are gaining competitiveness.
In this context, investors’ attention is naturally focusing on the development of alternatives and the diversification of supply chains. Companies like South Korea’s Dongjin Semichem and the U.S.’s DuPont could have opportunities to expand their market share in the photoresist market. Dongjin Semichem, in particular, has significantly improved its technology through collaboration with domestic semiconductor companies following Japan’s 2019 export restrictions.
The progress of this issue needs to be closely monitored over the coming months. The direction of the market will be determined by the official announcement from the Japanese government, China’s countermeasures, and the response strategies of global semiconductor companies. Personally, while short-term chaos seems inevitable, I believe it could serve as a catalyst for diversification and technological innovation in the semiconductor supply chain in the long run. However, I am concerned that the costs consumers will have to bear in this process may not be insignificant.
This article was written after reading the article Japan’s Rumored Halt of ‘Essential Semiconductor Material’ Photoresist Exports to China Stirs Market, with added personal opinions and analysis.
Disclaimer: This blog is not a news outlet, and the content reflects the author’s personal views. The responsibility for investment decisions lies with the investor, and no liability is assumed for investment losses based on the content of this article.
