Reasons for Japan’s Semiconductor Dominance: What Inspirations Can China Draw from It?
Recently, an escalating trade dispute between Japan and South Korea has attracted global attention. Japan’s export restriction on semiconductor raw materials to South Korea is a serious blow to chipmakers in South Korea. Panicked by it, semiconductor giants such as Samsung and SK Hynix are trying to figure a way out of this dilemma.
Last week, Japanese government announced that it would stop the preferential treatment for shipments for three semiconductor raw materials for South Korea. This curb would force Japanese exporters to seek approval for each individual shipment to South Korea, a procedure that takes about 90 days.
This export restriction is “a wallop” to South Korea because it curbs the export of three materials that South Korea cannot find alternatives to — photoresists used to transfer circuit patterns onto semiconductor wafers, hydrogen fluoride used as an etching gas in the chip-manufacturing process, and fluorinated polyamide used in smartphone displays.
Samsung Electronics and SK Hynix have to seek to purchase these materials from places such as Taiwan or China, as well as from possible companies from other countries.
“These materials are not something that we can find at another place and buy quickly. Even if we do find alternatives to Japan’s materials, we have to conduct tests on them so that we can make sure that their quality is good enough to make chips at a high yield,” said a spokesperson of one South Korean chip manufacturer.
Besides, among these three materials, two cannot be stockpiled - Hydrogen fluoride and photoresists. Hydrogen fluoride is highly toxic gas while photoresists deteriorate quickly.
Hydrogen fluoride can still be imported from China, but alternatives to photoresists and fluorinated polyamide are really hard to find.
Japan’s Material Science Is Too Advanced for South Korea to Catch up With
The South Korean government has just passed a bill to invest in semiconductor raw materials and production equipment. The purpose of the bill was to help South Korea to get rid of other developed countries’ impediments in the future. However, not long after that, Japan’s sanction to South Korea came.
According to Japanese media, Japan produces about 90% of fluorinated polyimide in the world, and its photoresists also account for around 90% of worldwide photoresists production. Korean industry data showed that South Korea imported $144 million of photoresists, hydrogen fluoride, and fluorinated polyamide from Japan in the first five months of this year.
How Did Japan Manage to Monopolize These Semiconductor Materials?
Let’s take the Japan-based company Shin-Etsu Chemical as an example. Shin-Etsu is the largest producer of silicon wafers in the world. Being capable of manufacturing refined monocrystalline silicon with ultra-high purity (99.999999999％) and a uniform crystal structure, the company has the leading technologies of semiconductor in the world. Therefore, the company’s history can, to a certain degree, mirror the one of Japan’s semiconductor materials development.
The first phase: fundamental research and industrialization (1941-1953)
After World War II, Japan began to come into contact with the US silicone industry. Three Japanese companies, including Toshiba, Shin-Etsu Chemical and Shimadzu, initiated their own development of technologies of industrialization of silicone. In 1952, Shin-Etsu Chemical successfully completed the tests of organosilicone monomer model by using the powder contact stirring method. Since then, silicone products have started to enter the market, and the Japanese silicone industry has begun to develop.
The second phase: rapid development (1953-1966)
In 1953, Shin-Etsu Chemical acquired the right to use the “patented technology” from the patent-holder General Electric Company (GE). In 1954, the company obtained the grant for industrialization of silicone rubber from Ministry of International Trade and Industry (MITI). In 1957, it signed a licensing agreement with Dow Corning (DC) to use the related products. Since 1960, Shin-Etsu has started to manufacture 1960 high-purity silicon, vinyl acetate monomer, and polyvinyl alcohol, and the company’s silicone business has been moving on the right track since then. With the help of the industrial promotion subsidy from the Japanese government, Shin-Etsu made a great effort to develop new technologies. For example, the company managed to independently develop various new silicone rubber products such as polyurethane foam stabilizer with new structure and addition-cure liquid silicone rubber, which increased its market share. In March 1960, Shin-Etsu Chemical topped the JPY 100-million milestone of sales of silicone products for the first time. From then on, Shin-Etsu Chemical’s production of silicone products ranked fourth in the world, following right after GE, DC, and UC. Thanks to Shin-Etsu’s rapid development, Japan’s silicone production increased by 6 times from 1960 to 1970. During the period, Japan’s silicone industry underwent a transformation marked by the growth in the silicone strength.
The third phase: sustainable development (1967-1988)
In 1966 and 1967, the patents on both synthesis and hydrolysis of silicone monomers held by two US-based companies, DC and GE, expired in Japan. In 1967, DC formed a joint venture called Dow Corning Toray Silicones with Japan’s Toray, while in 1971, GE likewise set up a joint venture called GE Toshiba Silicones with Toshiba. These two companies as well as Shin-Etsu Chemical became three market-dominant companies in Japan. Being a typical “domestic technology” company, Shin-Etsu Chemical has taken several measures to reinforce the position of the silicone made in Japan, and by doing so, it gradually prevailed in its competition with the US companies. In this period, Japan’s silicone industry witnessed a continuous rapid development. Japan’s production of silicone surged from about 6,000 tons to over 60,000 tons from 1970 to 1986, increasing by more than 10 times. In the same period, Japan overtook America as the leading producer of silicone; moreover, Japan reported JPY 3.6 billion import of silicone and JPY 3.7 billion export in 1979, marking its transformation from a silicone importer to a silicone exporter.
Technical Development Is the Trump Card
Shin-Etsu has established seven research and development centers: Silicone-Electronics Materials Research Center, Advanced Functional Materials Research Center, Magnetic Materials Research Center, New Functional Materials Research Center, Semiconductor Materials Research Center, Specialty Chemicals Research Center and PVC & Polymer Materials Research Center. Besides the various preferential policies and subsidies given by MITI during the early stage of development of silicone industry, MITI also formulated a “Basic Plan for Research and Development of Silicon-based Polymer Materials,” in which it invested JPY 16 billion. The plan consisting of three phases, aiming for the synthesis and processing technologies of silicone monomers and polymers, again provided substantial support for silicone-manufacturing companies represented by Shin-Etsu Chemical in terms of funding and technology. With the help of the financial and technical support, Shin-Etsu Chemical, persevering with its research and development, rose to the largest manufacturer of monocrystalline silicon in the world step by step. The products listed above such as photoresists and etching gas were all developed in this way.
There is a lot of concern whether China is handicapped by Japan. The answer to this question is in the affirmative that Japan does handicapped China. The truth is that no country can manufacture all raw materials and devices on its own. Even Japan, who is so powerful when it comes to silicone industry, still has some devices that it cannot produce, such as plasma CVD and electroplating equipment. But China need to realize Japan’s strength in semiconductor industry and expand investment in technical development, so as to change the status quo that China is being held back by Japan as soon as possible.