When Japan Blocks Photoresist Exports, Opportunities Arise for Korean Companies
Editor
Another geopolitical ripple is occurring in the semiconductor industry. News of the Japanese government significantly strengthening export controls on photoresists to China has led to analyses suggesting that Korean companies might encounter unexpected opportunities. In fact, this situation was one of the scenarios China feared the most. Photoresists are an indispensable key material in the semiconductor manufacturing process, and Japan’s technological prowess and market share in this field are overwhelming.
Looking more closely at the photoresist market, the global market size is estimated to be around $4.5 billion, with Japanese companies accounting for more than 80% of it. Major Japanese chemical companies like Tokyo Ohka Kogyo (Tokyo: 4186), Shin-Etsu Chemical (Tokyo: 4063), and JSR (Tokyo: 4185) almost monopolize this market. Particularly for EUV (extreme ultraviolet) photoresists, essential for advanced semiconductor manufacturing, Japanese companies are known to hold over 90% of the market share.
The reason this new Japanese export control measure is drawing so much attention is that it targets a key material that could directly impact China’s semiconductor ambitions. China has been making significant strides in the memory semiconductor and foundry sectors, increasing its presence in the global semiconductor market. Chinese memory companies like YMTC and CXMT, as well as foundry companies like SMIC, have been rapidly closing the technology gap.
However, no matter how advanced semiconductor manufacturing technology becomes, production is impossible without a stable supply of key materials like photoresists. Photoresists are essential photosensitive materials for forming semiconductor circuit patterns, and there are currently almost no alternative materials or technologies available. This is especially true for advanced processes below 7 nanometers.
Opportunities for Korean Companies, but a Challenging Path
In this situation, opportunities are indeed opening up for Korean companies. Dongjin Semichem (KOSPI: 005290) already possesses significant technological capabilities in the photoresist field and supplies domestic semiconductor companies. According to the company, photoresist sales accounted for about 35% of total sales as of 2024, and inquiries from Chinese clients have significantly increased this year.
SK Materials (KOSPI: 036490) is in a similar position. The company has been steadily expanding its photoresist business along with semiconductor specialty gases. In particular, its market share in the domestic ArF photoresist sector has risen to about 20%. A company representative stated, “We are accelerating preparations for entering the Chinese market” and “are currently conducting sample tests with several Chinese semiconductor companies.”
Solbrain (KOSDAQ: 357780) is taking a slightly different approach. The company is focusing on developing photosensitizers, the raw materials for photoresists, and is strengthening its position as a core raw material supplier rather than a finished product manufacturer. In fact, some Japanese photoresist companies also source certain raw materials from Korea. Solbrain’s sales from China accounted for about 15% in 2024, but this is expected to increase to over 30% this year.
However, to be honest, it seems unlikely that Korean companies can catch up with Japan’s technological gap in the short term. Photoresists are not just simple chemical materials; they require decades of accumulated know-how and precise quality control. Particularly for cutting-edge products like EUV photoresists, the patents and technological barriers held by Japanese companies are quite high.
China’s Response Strategy and Market Changes
China is unlikely to remain idle. The Chinese government has already invested substantial funds in domesticating semiconductor materials, and photoresists are no exception. Chinese companies like Beijing Kehua and Suzhou Ruihong are venturing into photoresist development, but their technological level is still far behind Japan and Korea.
Interestingly, Chinese companies are not only focusing on technology development but are also actively recruiting overseas talent. There have been increasing cases of scouting researchers who worked at major Japanese chemical companies, and there are reports of Korean company personnel moving to China.
Market experts believe that Japan’s export restrictions could actually accelerate China’s improvement in semiconductor material self-sufficiency. This pattern is similar to Japan’s export restrictions on Korean semiconductor materials in 2019. At that time, it dealt a significant short-term blow to the Korean semiconductor industry but eventually prompted domestic material companies to develop technologies and diversify supply chains.
As of December 2025, the localization rate of key semiconductor materials for Samsung Electronics and SK Hynix has significantly increased compared to 2019. For photoresists, the use of domestic substitutes has increased for some general-purpose products. Although reliance on Japan remains high for cutting-edge products, the technological gap is clearly narrowing.
Personally, I believe this situation presents a definite opportunity for the Korean materials industry. However, instead of merely focusing on entering the Chinese market, it is crucial to use this opportunity to elevate technological capabilities to the next level. After all, once China succeeds in developing its own technology, it will reduce its dependence on foreign sources.
Companies like Huvis (KOSPI: 093370) are also noteworthy. Traditionally engaged in agrochemicals and pharmaceuticals, this company has been increasing its focus on the semiconductor materials business. It is building competitiveness in the field of special chemicals, which are raw materials for photoresists, and is steadily preparing for entry into the Chinese market.
Ultimately, Japan’s photoresist export restrictions could become a significant turning point that reshapes the global semiconductor supply chain. While it presents opportunities for Korean companies, it also poses challenges in terms of China’s technological pursuit and the establishment of its own supply chain. It will be fascinating to observe the changes in this market over the next few years.
This article was written after reading “The Worst Scenario China Feared”… As Japan Blocks Photoresist, Korea Eyes Windfall, adding 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 responsibility is taken for investment losses based on the content of this article.
