Recently, Japan’s new Prime Minister, Sanae Takaichi, made a series of provocative statements that severely impacted Sino-Japanese relations, and China is prepared for substantial countermeasures against Japan. In the context of escalating Sino-Japanese relations, companies relying on the Japanese market/supply chain are under pressure, while those capable of domestic substitution in the semiconductor equipment and materials sectors will encounter new opportunities.With the market expectations of tense Sino-Japanese relations, the urgency to reduce dependence on Japanese technology and materials has increased, focusing on domestic substitution opportunities in materials:Semiconductor photoresists are globally dominated by Japanese companies and DuPont, with Japan’s JSR, TOK, Shin-Etsu, and Sumitomo holding major market shares; domestic substitutes to watch include Tongcheng New Materials, Dinglong Co., Jingrui Electric Materials, Hengkong New Materials, and Yake Technology (packaging);Panel photoresists, after the exit of South Korea, are dominated by Japan’s JSR, TOK, and Sumitomo; domestic substitutes to watch include Yake Technology and Tongcheng New Materials;TMAH developer, semiconductor-grade, is led by Japan’s TOK and the U.S. company TMC; domestic substitutes to watch include Glinda;Epoxy molding compounds, globally, semiconductor packaging molding materials are dominated by Japan’s Sumitomo Bakelite, Lisono (formerly Hitachi, Showa); domestic substitutes to watch include Huahai Chengke and Feikai Materials;PI materials, PI orientation agents (JSR, Nissan Chemical, etc.), YPI (Ube, etc.), PSPI (Toray, Asahi Kasei, etc.), domestic substitutes to watch include Dinglong Co., Yanggu Huatai, Wanrun Co., and Aisen Co.;OLED luminescent materials, Japan’s Idemitsu (blue light) holds a core position globally; domestic substitutes to watch include Lite-On Optoelectronics and Wanrun Co.;TAC films, globally dominated by Japan’s Fujifilm, Konica, and Reon; domestic substitutes to watch include Tianlu Technology;High-performance ceramics, Japan’s Kyocera and TDK dominate globally; domestic substitutes to watch include Guoci Materials;
Focus on the semiconductor industry chain where Japanese material manufacturers hold a high market share, with domestic share expected to further increase:
(1) Silicon wafers (Shin-Etsu, Seiko), focus on Xi’an Yicai, Hu Silicon Industry, Shanghai Hejing, and Lianang Micro;
(2) Mask plates (DNP, TOPPAN), focus on Qingyi Optoelectronics, Longtu Photomask, and Luwei Optoelectronics;
(3) Photoresists (JSR, Shin-Etsu, Tokyo Ohka, Sumitomo Chemical, Fujifilm), focus on Tongcheng New Materials, Jingrui Electric Materials, Nanda Optoelectronics, Dinglong Co., Shanghai Xinyang, and Hengkong New Materials;
(4) Target materials (Mitsui Mining & Smelting, Tokai), focus on Jiangfeng Electronics and Yuyuan New Materials;
(5) Electronic specialty gases (Mitsui Chemicals, Kanto Denka, Showa Denko), focus on China Shipbuilding Specialty Gases, Huate Gas, Nanda Optoelectronics, Haohua Technology, and Jinhong Gas.
The domestic large-size semiconductor cutting and grinding equipment is highly dominated by Japanese companies. The escalation of Sino-Japanese relations will accelerate the self-sufficient process in the semiconductor cutting and grinding equipment sector. Japanese companies, leveraging long-term technological accumulation and deep cooperation with downstream international giants, have gained first-mover advantages and formed scale effects in multiple application scenarios, with companies like DISCO, Tokyo Precision, and Japan’s Toyo monopolizing the domestic market. Currently, the 8-12 inch large silicon wafer cutting equipment is mainly supplied by Japan’s Toyo, and due to export controls, high-end equipment such as their third-generation machines are not exported to China, hindering the expansion of domestic 12-inch large silicon wafers.With the recent escalation of Sino-Japanese relations, both sides may implement stricter regulatory measures on core industrial chains such as semiconductors, which is expected to further accelerate the self-sufficient process of domestic large-size semiconductor cutting and grinding equipment. The overseas value of large-size cutting/polishing equipment is approximately 14 million/18 million yuan per unit, with a total domestic substitution space exceeding 10 billion yuan.Yujing Co.: Progress in the R&D of 12-inch large silicon wafer cutting machines is going smoothly, expected to achieve exclusive domestic substitution first.The company is collaborating with leading enterprises in the large silicon wafer sector to develop 12-inch large silicon wafer cutting equipment, with current equipment producing silicon wafers with a warpage of 8μm, meeting the production requirements for high-performance AI chips. Product validation and introduction are expected to be completed by Q1 2026, with mass shipments in the second half of the year; meanwhile, the company is also developing 12-inch large silicon wafer grinding and polishing equipment, aiming to achieve full domestic substitution of the large silicon wafer cutting and grinding equipment industry chain first.