Japanese photoresist suppliers are alerting chip manufacturers about shortages of key raw materials, subjecting the global semiconductor supply chain to a fresh geopolitical stress test.
According to a report by South Korean tech media The Elec, the Strait of Hormuz has been effectively blocked since early March, leading to a significant tightening of naphtha supplies. Naphtha is a core raw material for specialty chemicals used in semiconductor production. This shortage has prompted major Japanese photoresist suppliers to issue, or prepare to issue, warnings to customers like Samsung Electronics and SK Hynix about potential procurement disruptions for essential materials.
The supply disruption is expected to impact advanced process technologies most significantly. Analysis cited in the report indicates the shortage will likely hit advanced nodes reliant on Extreme Ultraviolet (EUV) lithography the hardest. South Korea is one of the world's largest consumers of photoresist. While semiconductor manufacturers typically maintain several months of safety stock, and some alternative supplies from the US could support chip output for approximately six months, medium to long-term risks remain a serious concern.
**Supply Chain Transmission: From Naphtha to Photoresist** The root of the shortage lies in a clear chemical industry supply chain pathway. Naphtha can be cracked at high temperatures to produce intermediates like propylene, which are then used to manufacture Propylene Oxide (PO). PO is a key precursor for synthesizing PGME (Propylene Glycol Monomethyl Ether) and PGMEA (Propylene Glycol Monomethyl Ether Acetate), both of which are now experiencing shortages. PGME and PGMEA have wide-ranging applications in semiconductor manufacturing, including in photoresists, thinners, Bottom Anti-Reflective Coatings (BARC), Spin-On Hardmasks (SOH), and temporary bonding adhesives for High Bandwidth Memory (HBM) packaging.
Japan's reliance on Middle Eastern naphtha exceeds 40%, making its supply structure highly concentrated and particularly vulnerable in the context of the Strait of Hormuz blockage.
**Japanese Suppliers Alert Samsung and SK Hynix** Japanese suppliers providing these materials to Samsung Electronics and SK Hynix include Shin-Etsu Chemical, Tokyo Ohka Kogyo, JSR Corporation, Fujifilm, and Nissan Chemical. These companies have informed, or are preparing to inform, their customers that raw material procurement faces disruption risks. This means the supply stability of materials from photoresists to related semiconductor products is under direct threat from upstream geopolitical conflict.
**Alternatives Exist, But Short-Term Switching is Difficult** Under supply pressure, Japanese photoresist and related material manufacturers are considering sourcing PGME and PGMEA from South Korea or China. However, this solution faces a major obstacle: the Process Change Notification (PCN) procedure. Any change in raw material sources requires Samsung and SK Hynix to re-qualify the related products, a process that typically takes about a year, and potentially even longer for advanced processes. This means switching suppliers is not a viable short-term solution, and the fragility of the supply chain is likely to persist for a considerable time.
**Inventory Buffers and Self-Sufficiency Offer Some Hedging**
Despite rising risks, the market currently has some buffer. Semiconductor manufacturers generally maintain inventory reserves for critical materials ranging from weeks to months. Combined with some alternative US supplies, chip output could potentially be maintained for around six months.
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