How Japan’s Chemical Empire Controls Korea and Taiwan

How Japan’s Chemical Empire Controls Korea and Taiwan

Imagine you control the world’s most advanced 
factory. You can build the impossible. The chips that power our artificial intelligence, our 
smartphones, our very future… they all come from your machines. You are the undisputed king 
of technology. Now… what if I told you that at any moment, someone you barely think about could 
flip a switch and turn your entire empire to dust? For decades, the world has been mesmerized by 
the rise of Taiwan’s TSMC and South Korea’s Samsung and SK Hynix. They are the titans of the 
semiconductor industry, the public faces of our digital age. Their foundries—sprawling, sterile 
complexes where robots dance in a ballet of atomic precision—are geopolitical flashpoints, their 
every move watched by world leaders. South Korea, for its part, is a memory chip juggernaut. Samsung 
and SK Hynix together command over 73% of the global market for DRAM, the volatile memory that 
acts as the short-term brain for our computers and phones, and over 51% of the market for NAND flash, 
the long-term storage that holds our photos, apps, and operating systems. They are, in every 
sense, the bedrock of the digital economy. Taiwan, in particular, has built what it calls a 
“silicon shield,” the idea that its dominance in chip manufacturing—producing a staggering 90% 
of the world’s most advanced logic chips—makes it too important to fail, too critical for the 
global economy to allow a hostile takeover. This technological supremacy is seen as a deterrent, 
a guarantee of security in a volatile world. The theory is simple: if the world needs your 
chips to function, the world will protect you. It’s a powerful and compelling narrative, 
one that has shaped global strategy for years. But in the summer of 2019, a quiet political 
dispute between Tokyo and Seoul sent a shockwave through this ecosystem. It revealed a hidden 
dependency, a foundational chokepoint so critical, yet so invisible, that it forces 
us to ask a terrifying question: Who really controls the chip industry? The public 
and political focus is almost entirely on the fabrication stage, the foundries themselves, 
but this is a strategic blind spot. The true, less-visible leverage lies further 
upstream, in the hyper-specialized world of chemical engineering and material 
science. The answer, it turns out, is not in Taiwan or South Korea. It’s in a 
handful of unassuming chemical plants in Japan. The crisis began not with a bang, but with a 
court ruling. In late 2018, South Korea’s Supreme Court ordered Japanese companies, including 
Mitsubishi Heavy Industries and Nippon Steel, to compensate victims of forced labor during 
Japan’s colonial rule. For Seoul, this was a matter of justice for individuals, a right that 
couldn’t be signed away by governments. For Tokyo, which insisted all claims were settled by a 1965 
treaty that normalized relations, this was an unacceptable breach of an international agreement. 
Japan was furious. But its response wasn’t just diplomatic outrage. It was brutally strategic.
On July 1st, 2019, Tokyo announced it was tightening export controls on three, seemingly 
obscure chemicals destined for South Korea. The first was fluorinated polyimides, a 
critical component for the flexible OLED displays in the latest smartphones. The second 
was photoresists, a light-sensitive liquid essential for photolithography, the process 
of printing microscopic circuit patterns onto chips. The third was ultra-high purity 
hydrogen fluoride, a gas used for cleaning and etching silicon wafers at the atomic level.
To the outside world, it looked like bureaucratic red tape. Instead of a simple bulk license, 
Japanese exporters would now need to apply for an individual license for every single shipment, 
a process that could take up to 90 days. But to the executives at Samsung and SK Hynix, it 
was a declaration of war. Why? Because their multi-hundred-billion-dollar empires were almost 
completely dependent on Japan for these materials. The numbers were stark. According to the 
Korea International Trade Association, South Korea imported 94% of its fluorinated 
polyimides from Japan. For photoresists, the dependency was 92%. And while the figure 
for hydrogen fluoride was a lower 44%, for the ultra-high purity grades required for the most 
advanced chips, the reliance was effectively 100%. Japan had chosen its weapons with surgical 
precision, targeting the exact inputs where Korea had no immediate alternative.
This wasn’t just a trade dispute. This was a live-fire exercise in economic statecraft. Japan 
was demonstrating its chokehold power, weaponizing the deep, structural interdependencies of the 
global supply chain. The Japanese government’s official justification cited national security 
concerns and alleged mismanagement of sensitive materials by Seoul, but this was widely seen as a 
pretext. Prime Minister Shinzo Abe himself linked the move to the forced labor issue, stating 
that because South Korea was failing to abide by international agreements, Tokyo had to assume 
it was also breaking rules on sensitive exports. The timing, immediately following the court 
ruling, and the precise targeting of “choke point items,” pointed to a different motive: leverage.
The effect was immediate. Panic erupted in Seoul. Samsung’s de facto leader, Vice Chairman Lee 
Jae-yong, flew to Tokyo on an emergency mission to meet with suppliers and plead for shipments. 
The CEO of SK Hynix did the same. They sent urgent notices to their partner companies, telling them 
to stockpile 90 or more days’ worth of any and all Japanese materials they could get their hands on.
The data tells the story of the exercise’s success. Japanese exports of hydrogen fluoride 
to South Korea plummeted by an astonishing 87.9% almost overnight. The shockwaves rippled across 
the globe. Major US tech companies like Apple, Amazon, and Google, who rely on Samsung and SK 
Hynix for the memory chips that power everything from the iPhone to their massive data centers, 
began making frantic calls to Seoul. They wanted to know if the global supply of DRAM and 
NAND flash memory was about to be cut off. In Taiwan, TSMC’s co-CEO rated the dispute as 
the “biggest uncertainty” for the industry, fearing a collapse in orders if its clients 
couldn’t get the memory chips they needed. The conflict rattled global stock markets, with South 
Korea’s KOSPI index hitting a seven-month low and the tech-heavy KOSDAQ plunging over 7%, triggering 
a trading halt for the first time in years. This was a calculated move, targeting the precise 
materials where South Korea was most vulnerable. It was a chilling demonstration that Japan could, 
at will, threaten to shut down the crown jewels of the Korean economy. This event permanently altered 
the risk calculation for both Seoul and Taipei. It forced them to view their Japanese suppliers not 
just as partners, but as a potential strategic vulnerability. Japan, feeling its decades-long 
dominance in finished electronics fade, had fired a warning shot, reminding the world—and 
especially its ambitious neighbors—where the foundational power still resided.
So why is this dependency so absolute? Why can’t a technological giant like Samsung, with its vast 
R&D budget and army of engineers, just make these chemicals itself? The answer lies in a world of 
near-impossible physics and chemistry—a realm that is less about industrial scale, and more about a 
kind of technological black magic, perfected over decades of painstaking, incremental improvement.
It all starts with this: a perfect, shimmering disc of silicon. A silicon wafer. It is the canvas 
upon which every microchip is painted. And over 60% of the entire global market for these 
foundational discs is controlled by just two Japanese companies: Shin-Etsu Chemical and SUMCO. 
In fact, when combined with other Japanese firms, they control about half of the entire 
market for all semiconductor materials. Making a wafer is an art form, a process that 
pushes the boundaries of material science. It begins with melting highly purified 
polycrystalline silicon in a quartz crucible at a blistering 1,425 degrees Celsius. 
Then, a tiny, perfectly-oriented seed crystal is dipped into the molten silicon. This seed is 
then pulled upwards, excruciatingly slowly—just a few centimeters per hour—while both the seed 
and the crucible rotate in opposite directions. This is the Czochralski method, or CZ method, 
invented in 1916. The goal is to grow a massive, single-crystal ingot, sometimes two meters long 
and weighing several hundred kilograms, that is atomically perfect. The entire process takes place 
in a stable, vibration-free environment under an inert argon atmosphere. Any microscopic impurity 
from the crucible, any unwanted vibration, any minute temperature fluctuation can 
introduce defects into the crystal lattice, ruining the entire multi-million dollar batch.
But the true challenge, the “black magic” that separates the masters from the apprentices, 
is achieving purity. We’re not talking about 99% pure. We’re talking about “eleven-nines” 
purity—99.99% pure silicon. That’s an impurity level of one part per trillion. It’s the 
equivalent of finding a single contaminated grain of sand on a beach a kilometer long. 
This isn’t just about filtering; it’s about decades of accumulated, tacit knowledge—what 
the Japanese call monozukuri, the art, science, and craft of making things. It’s an intuitive 
understanding of how to control thermal gradients, pull rates, atmospheric pressures, and dopant 
concentrations. It is a process so complex and sensitive that other nations have poured 
billions of dollars into replicating it, and have largely failed to match the quality 
and consistency of the Japanese masters. If the silicon wafer is the canvas, photoresist 
is the magic paint. And in the world of cutting-edge chips, the master artists are 
Japanese. Companies like JSR Corporation, Tokyo Ohka Kogyo (TOK), and Shin-Etsu Chemical 
dominate the market for the most advanced photoresists. Their control is especially absolute 
in the most critical segment: photoresists for Extreme Ultraviolet, or EUV, lithography.
EUV lithography is the technology that allows chipmakers like TSMC and Samsung to build 
today’s most advanced chips. It uses light with an incredibly short wavelength of just 13.5 
nanometers to print impossibly small circuits. But this light is a diva. It is absorbed by almost 
everything, including air and even glass lenses. Therefore, the entire multi-hundred-million-dollar 
machine must operate in a near-perfect vacuum, using a complex system of ultra-reflective 
mirrors to guide the light onto the wafer. The photoresist itself is a hyper-complex chemical 
cocktail. When a single, high-energy EUV photon strikes the resist, it must trigger a precise 
chemical reaction. Typically, it activates a Photoacid Generator (PAG), which releases an acid 
that then alters the solubility of the surrounding polymer, allowing it to be washed away to leave 
a perfect, nanometer-scale circuit pattern. But here’s the impossible trade-off, a fundamental 
problem in lithography known as the RLS Triangle: Resolution, Line-edge Roughness, and Sensitivity. 
If you make the resist more sensitive to react to fewer expensive photons (increasing throughput), 
the statistical randomness of those photons—the shot noise—causes the edges of your circuit 
lines to become rough, leading to defects and short circuits. If you formulate the resist to 
create smoother lines and improve resolution, you typically need a higher dose of 
photons, which reduces sensitivity and slows down the entire factory.
Solving this trilemma is the holy grail of lithography. It’s not a matter of simple 
reverse-engineering; it is a black art of chemical formulation, balancing polymers, PAGs, quenchers, 
and solvents in a delicate dance. Japanese firms, through decades of R&D, hold a near-monopoly on 
these secret recipes, with companies like TOK, JSR, and Shin-Etsu commanding a combined 90% of 
the critical EUV photoresist market. The barrier to entry here is not primarily financial; it’s 
intellectual and temporal. You simply cannot buy 40 years of incremental, trial-and-error chemical 
research. This explains why the dependency on Japan is so profound and so difficult to break.
This brings us to the ultimate paradox. Taiwan Semiconductor Manufacturing Company, or TSMC, 
is arguably the most important company in the world. It fabricates over 60% of the 
world’s semiconductors by revenue and over 90% of the most advanced chips below 
10 nanometers. It has the money, the talent, and the political will of a nation behind 
it. So why hasn’t it broken free from Japan’s chemical empire? Why does the undisputed king 
of chips still bend the knee to its suppliers?. The answer is that this isn’t a weakness; 
it’s a core part of its strategy. It is a calculated reliance. TSMC’s entire business model, 
pioneered by its legendary founder Morris Chang, was to focus on one thing and do it 
better than anyone else on Earth: contract manufacturing. By outsourcing the chip 
design to “fabless” companies like Apple and Nvidia, and sourcing the absolute best materials 
from specialists in Japan, TSMC could pour all of its immense capital and engineering talent 
into perfecting the fabrication process itself. It’s a deeply symbiotic relationship. Japanese 
material science enables TSMC’s manufacturing prowess, and TSMC’s massive, predictable orders 
for the latest and greatest materials fuel the R&D of its Japanese suppliers. This 
partnership is so crucial that TSMC has even begun collaborating directly with firms 
like Ajinomoto, famous for its MSG seasoning, to develop the next generation of insulation 
films needed for advanced AI chip packaging. But make no mistake, it is a fundamentally unequal 
partnership. While TSMC has immense bargaining power and can set prices, its power evaporates 
when it comes to the most critical inputs. It can, in theory, switch to a different supplier, but 
for the most advanced silicon wafers and EUV photoresists, there are no viable alternatives 
at the necessary scale and quality. In this specific domain, Japan holds the chokepoints.
This unequal dynamic is perfectly illustrated by TSMC’s recent, massive investments in Kumamoto, on 
Japan’s southern island of Kyushu. On the surface, this looks like TSMC expanding its empire to 
diversify production away from the geopolitical fault line of Taiwan. But look closer. 
This isn’t just about diversification. It’s about moving closer to the heart of its 
own supply chain. By building fabs in Japan, TSMC isn’t just securing its access to chips; 
it’s securing its access to the materials needed to make those chips. It’s a move to de-risk 
its supply chain by placating its own masters. The Japanese government has rolled out the red 
carpet, pledging over a trillion yen (roughly $7 billion) in subsidies for TSMC’s first two 
Kumamoto fabs. This is because the partnership reinforces Japan’s own national strategy of 
“strategic indispensability”. The venture, known as JASM (Japan Advanced Semiconductor 
Manufacturing), is a joint project with TSMC’s own key Japanese customers, Sony and Denso, who 
are now major stakeholders. This move embeds TSMC deeper into Japan’s industrial ecosystem, 
making it even more reliant on Japanese suppliers. This is not an act of colonization by TSMC, 
but arguably one of strategic vassalization. By moving production to its supplier’s territory, 
TSMC mitigates the risk of a supply cutoff, but in doing so, it deepens the very dependency 
it seeks to manage. This creates a powerful geopolitical alignment. Taiwan and Japan, both 
democratic nations facing threats from China, are intertwining their most critical industries. 
TSMC’s reliance on Japan becomes a strategic asset for both. An attack on Taiwan that disrupts 
TSMC would now cripple Japan’s chemical industry, giving Tokyo a powerful economic 
incentive to support Taiwan’s defense and maintain regional stability.
But this chemical empire is not invincible. Japan’s throne is more fragile than it 
appears. Its greatest strength—its deep, geographically concentrated ecosystem of 
expertise—is also its greatest weakness. The country is a hotbed of natural disasters. 
Japan sits on the Pacific Ring of Fire, making it exceptionally vulnerable to earthquakes 
and tsunamis. A major seismic event in the right place could knock out a critical plant and send 
the entire global tech industry into a tailspin. The concentration of new facilities in Kumamoto, 
a region hit by a major earthquake in 2016, highlights this very real risk.
Then there’s the human element. Japan is facing a demographic crisis unlike any 
other developed nation. A plummeting birthrate, a rapidly aging population, and a persistent 
shortage of STEM graduates create a looming shortfall of the very engineers and technicians 
needed to maintain this technological edge. And finally, Japan itself is dependent. 
It must import the vast majority of the raw minerals and energy needed to create its 
chemical magic, making it vulnerable to its own set of supply chain disruptions further upstream.
The 2019 trade dispute was a painful but necessary wake-up call for South Korea. In its wake, Seoul 
launched a massive, multi-hundred-billion-dollar national strategy to break its dependency on 
Japan. Dubbed the “K-Semiconductor Strategy,” its ambitious goal is to achieve 50% self-sufficiency 
in core materials, parts, and equipment by 2030. And against all odds, it has seen some stunning 
successes. In a matter of months, Korean chemical companies like Soulbrain and SK Materials managed 
to develop and mass-produce the ultra-high purity hydrogen fluoride that Japan had cut off, a feat 
many industry experts thought would take years, if it was possible at all. The government 
expedited paperwork and provided funding, allowing firms like Soulbrain to build new plants 
and ramp up production with incredible speed. But the hardest challenges remain. While 
they solved the hydrogen fluoride problem, localizing the complex “black magic” of EUV 
photoresists has proven far more difficult. The Korean gambit has shown that the walls of 
Japan’s empire can be breached, but taking the throne is another matter entirely. Japan’s power 
is potent but brittle. The very act of using its leverage, as it did in 2019, directly inspires and 
accelerates efforts by its targets to undermine that leverage. This creates a feedback loop where 
Japan’s dominance is, in a way, self-eroding. Its power exists on a spectrum of difficulty; 
some materials are replicable with a massive national effort, while others are not, at least 
not yet. This means the silent emperor rules best when their power is felt, but not seen.
Lurking behind this intra-Asian rivalry is the immense shadow of China. Beijing is pouring 
hundreds of billions of dollars into its domestic semiconductor industry, aiming for complete 
self-sufficiency as part of its “Made in China 2025” plan. While it lags years, perhaps decades, 
behind in both advanced fabrication and materials, its sheer scale, political will, and willingness 
to use any means necessary to acquire technology mean it cannot be ignored. A future where 
China masters these foundational technologies would not just disrupt the market; it 
would shatter the current world order. For years, the world’s geopolitical attention 
has been fixed on the foundries of Taiwan, seeing them as the ultimate chokepoint in 
our technological world. Commentators and politicians warn that a conflict in the Taiwan 
Strait would bring the global economy to its knees by cutting off the supply of advanced chips. But 
we’ve been looking in the wrong place. The 2019 trade war and the quiet chemistry behind our 
chips reveal a deeper, more fundamental truth. The real power, the foundational control over 
the digital age, doesn’t lie with those who assemble the final product. It lies with those 
who master the raw elements. It lies in the quiet, indispensable chemical empire of Japan.
This understanding reframes the entire strategic landscape. Japan’s decline in finished chips, 
a narrative of a fading giant since the 1980s, masked its strategic consolidation of power in 
the foundational materials and equipment that nobody else could master. The 2019 dispute was 
a chilling demonstration of how this material dominance can be used as a potent geopolitical 
weapon, a tool of economic statecraft that can hold entire industries hostage. And the 
competitive moat protecting this empire isn’t built of concrete and steel, but of 
something far more formidable: knowledge. The “black magic” of achieving atomic-level purity is 
a fortress built on decades of accumulated wisdom, one that capital alone cannot easily storm.
The silent war for the soul of the semiconductor is just beginning. The key battlegrounds 
to watch are not in the Taiwan Strait, but in the laboratories of Seoul, the industrial 
parks of Kumamoto, and the state-funded research centers in China. The race is on to either break, 
or reinforce, Japan’s quiet chemical supremacy. The future of technology, and perhaps the 
global balance of power, may depend on who wins.

Japan is not a fading giant, but a quiet emperor ruling the most critical layer of the supply chain.

Footage: Shutterstock

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