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HomeTechnology NewsJSR Corp's Board to Discuss Potential Multi-Billion Dollar Buyout

JSR Corp’s Board to Discuss Potential Multi-Billion Dollar Buyout

The board of JSR Corp, a semiconductor materials maker, is set to meet on Monday to discuss a potential multi-billion dollar buyout by a government-backed fund.

The move represents Japan’s efforts to strengthen its chip industry and regain global market share. JSR’s market capitalization stood at 677 billion yen ($4.73 billion) at the close of the market on Friday.

Following the announcement that the company was considering acquisition by Japan Investment Corp (JIC), which is overseen by the powerful trade ministry, JSR’s shares were untraded with a surge of buy orders on Monday.

Japan’s Push to Revitalize its Chip Industry

A buyout by JIC would be part of Japan’s recent series of assertive moves to boost its chip industry, which holds an advantage in materials and equipment but has experienced a decline in overall global market share.

JSR is a leading supplier of photoresists, which are light-sensitive chemicals used in printing patterns on wafers. According to Kazuhiro Sugiyama, an expert from research firm Omdia, Japan currently has a monopoly on this technology, with China and other countries yet to develop it.

The Japanese government’s involvement in potential acquisitions is seen as an effort to prevent the outflow of sensitive technology overseas.

Implications of the Acquisition

Tokyo Ohka Kogyo, Shin-Etsu Chemical, and Sumitomo Chemical are local competitors of JSR in Japan. The news of the potential acquisition caused Tokyo Ohka’s shares to jump 15%.

The Nikkei newspaper reported that JIC would spend around 1 trillion yen on acquiring JSR, with 500 billion yen injected into a new company for the purchase and 400 billion yen borrowed from Mizuho Bank.

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JSR initiated discussions with JIC about possible support, according to an industry ministry official. The official, who spoke anonymously due to media restrictions, stated that JSR needs significant investment in research and development as well as capacity expansion to meet growing demand.

Global Semiconductor Supply Control and Tensions

Countries worldwide are increasingly focusing on tightening control over semiconductor supply due to their vital role in defense, electronics, and automotive industries. This trend is particularly evident amid heightened tensions between China and the United States.

Travis Lundy of Quiddity Advisors noted that JIC’s involvement in JSR’s acquisition is likely just the beginning, suggesting that the fund may pursue further endeavors.

While Japan has a history of intervening to rescue struggling industrial players, taking a profitable company that has already undergone restructuring private risks drawing criticism for potential overreach.

JSR’s Performance and Shareholders

JSR, initially established in 1957 as a government-backed synthetic rubber producer, reported a 20% increase in sales to 408.9 billion yen in the fiscal year ending in March. However, its operating profit declined by 33% to 29.4 billion yen during the same period.

JSR’s shares have gained 25% year-to-date. Notably, the company has a foreign-born CEO, a rarity in the Japanese corporate landscape. Activist investor ValueAct Capital holds a significant stake in JSR and has representation on the board.

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