Investment agenda: People walking past the TSMC headquarters in Hsinchu, Taiwan. The company has plans to expand to the United States and Resonac intends to follow suit. — Bloomberg
TOKYO: Resonac Holdings Corp is ready to spend hundreds of billions of yen on chip acquisitions, as the 84-year-old chemicals giant seeks to boost its role as a pivotal supplier to global giants like Taiwan Semiconductor Manufacturing Co (TSMC) and Samsung Electronics Co.
The Japanese company, which last year outlined a 250 billion yen (RM8.2bil) blueprint to beef up its chip facilities by 2027, aims to capitalise on a much-needed consolidation of the US$580bil (RM2.5 trillion) semiconductor industry, chief executive officer Hidehito Takahashi told Bloomberg News.
Resonac – which changed its name from Showa Denko this month to reflect its changing focus – must seek out partners to thrive in an increasingly politicised and economically uncertain environment, he said.
Takahashi said there weren’t many attractive acquisition targets at the moment, within an industry in a state of flux.
Resonac is looking to invest, and one promising country was the United States, as its major customers from Samsung to TSMC spend billions to build plants there.
The Japanese company will remain cautious about spending in China, given Washington’s escalating campaign to curb that country’s semiconductor industry.
“I’m always on the lookout for potential acquisition chances, and I wouldn’t hesitate to spend a hundred billion yen if it merits restructuring our business portfolio,” the 61-year-old executive said in an interview.
“When a deal is justified, I will go ahead and throw hundreds of billions of yen at it as there are many financial tools for us to leverage. The problem is that no one wants to sell businesses that are growing.”
Demand for chips cratered in 2022 after consumers and businesses turned cautious about spending on everything from servers to smartphones.
Washington’s effort to curb Beijing’s ambitions in semiconductors, as well as uncertainty about a potential global recession, have also clouded the sector’s prospects.
“Everyone in the industry feels uneasy going it alone, especially when the yen was weaker late last year,” Takahashi said.
“I have no doubt consolidation is ahead for the industry, and the key is forming as many alliances as possible.” Some may evolve into acquisition talks, he added.
Growing through acquisitions is part of Resonac’s well-established playbook.
Takahashi, a former General Electric Co executive, led one of the Japanese company’s most transformative deals.
Resonac paid more than double its market value for the chemicals unit of Hitachi Ltd in 2020, an US$8.8bil (RM38bil) deal that made it a major supplier of a key compound used to polish the surface of silicon wafers.
It leads the market in key semiconductor packaging materials such as copper-clad laminates and photosensitive film, and it aims to increase the proportion of revenue from chip materials to 45% of overall sales by 2030 from 31% in 2021.
It’s now researching next-generation 3D packaging technology – anticipating a potential industry shift that could drive its next phase of growth.
Resonac, which formed a 12-member team of semiconductor packaging materials makers to research technologies for next-generation chips in 2021, last week announced a partnership with Infineon Technologies AG to supply materials for power semiconductors.
Takahashi pointed to similar alliances in future as Resonac prioritises tie-ups.
One big question mark for the global chip industry is China – the world’s largest semiconductor arena, but one under siege from the Biden Administration as well as domestic economic ructions in the wake of its post-Covid re-opening.
Takahashi echoed the views of Japanese peers by saying Resonac would try and ring fence its production chain there, in case US sanctions curtail its ability to operate in the world’s No. 2 economy.
The United States for now makes more sense as an investment destination because two of Resonac’s largest customers, TSMC and Samsung, are expanding there and could plan more factories in future.
“If the two say they will invest in the United States, it’s hard for us not to follow,” he said.
“China is not a place we can aggressively bet on due to economic and geopolitical reasons.” — Bloomberg
