NT$800 million joint venture lands in Kaohsiung! Daicel teams up with Formosa Plastics—why has the semiconductor chemicals sector become a new battleground for industry giants?

Daicel’s end-to-end in-house capabilities—from monomer design to polymer synthesis—have enabled it to establish a technological moat in core photoresist materials. Moreover, leveraging its century-long expertise in cellulose chemistry, Daicel manufactures wafer separation paper—specialized interleaving paper for semiconductor wafers—used in automated wafer handling systems to prevent surface scratches and contamination. It is one of the world’s leading suppliers in this niche segment. In short, Daicel covers multiple critical links across the semiconductor manufacturing chain: functional chemicals required for front-end lithography and etching, as well as engineering plastics and wafer separation paper needed for back-end packaging and testing. These are precisely the high-frequency items appearing on advanced-node chipmakers’ procurement lists. What does Formosa Plastics bring to the table? Formosa Plastics’ foray into semiconductor chemicals is far from starting from scratch. As one of the ‘Four Treasures’ of Taiwan’s largest petrochemical conglomerate—Formosa Plastics Group—its traditional businesses center on bulk plastics such as PVC and PE. Yet in recent years, Formosa Plastics has systematically entered the semiconductor chemicals arena via joint ventures, following a clear strategic path: partner with a cutting-edge Japanese chemical company, establish a local production facility, and secure Taiwanese semiconductor customers. To date, Formosa Plastics has launched at least two benchmark joint ventures in semiconductor chemicals: First, Formosa Tokuyama. Established in 2020 through a joint venture between Formosa Plastics and Japan’s Tokuyama Corporation, Formosa Tokuyama produces electronic-grade isopropyl alcohol (IPA) at its Lin Yuan plant in Kaohsiung. Its Phase I production capacity stands at 30,000 tons per year—currently operating at full capacity. In late May 2026, Formosa Plastics announced a NT$500 million capital increase to launch Phase II expansion, scheduled for completion in 2028, which will double IPA output. Second, Formosa Daikin. A joint venture between Formosa Plastics and Japan’s Daikin Industries, Formosa Daikin reportedly commands approximately 55% of Taiwan’s electronic-grade hydrofluoric acid (HF) market. In Q3 2026, Formosa Daikin announced price hikes for electronic-grade HF and high-purity IPA, citing rising raw material costs—including fluorite, sulfuric acid, and propylene—as well as robust demand driven by AI chip capacity expansion. Additionally, Formosa Plastics Chairman Wen-Pi Kuo publicly stated at the annual shareholders’ meeting that semiconductor-related chemicals and critical materials constitute a top strategic priority for the group’s transformation. Formosa Plastics has already secured projects targeting electronic-grade hydrogen, ammonia water, hydrochloric acid, and sulfuric acid—and is actively developing high-barrier materials such as ruthenium metal precursors for atomic layer deposition (ALD) and photoresist diluents. If Daicel brings the technological foundation, Formosa Plastics contributes customer access and localized manufacturing capability. Taiwan’s semiconductor supply chain is highly concentrated in the Hsinchu, Taichung, and Kaohsiung Science Parks. As Taiwan’s largest domestic petrochemical group, Formosa Plastics enjoys unparalleled local advantages—in land acquisition, infrastructure support, government relations, and customer networks—that foreign firms struggle to match. This explains why nearly all Japanese chemical enterprises entering Taiwan’s semiconductor materials market opt for joint ventures with Formosa Plastics. Why are chemical conglomerates flocking en masse to the semiconductor chemicals sector? Viewed within the broader industry context, Daicel’s partnership with Formosa Plastics is not an isolated commercial deal—it epitomizes a sector-wide trend. First, Taiwan’s semiconductor materials market is expanding rapidly. According to industry research institutions, Taiwan’s semiconductor materials market stood at approximately USD 19.4 billion in 2026 and is projected to grow to over USD 35 billion by 2035, representing a compound annual growth rate (CAGR) of roughly 6.8%.

Breaking free from low-price competition! LG Chem partners with Jianghuawei to advance high-end IPA—how is the C3 petrochemicals value chain undergoing structural reconfiguration?

This powerful collaboration between LG Chem and Jianghuawei precisely addresses domestic industrial gaps, establishing a mature, integrated model combining 'high-quality overseas raw materials + localized precision processing.' Jianghuawei—the first wet electronic chemicals specialist in China to list on the capital markets—has spent over two decades deepening its expertise in ultra-clean, ultra-high-purity reagents and photoresist ancillary chemicals. With proven purification processes, a comprehensive production system, and extensive relationships with domestic semiconductor clients, Jianghuawei stands as a core enterprise in China’s high-end wet electronic chemicals sector. The division of labor between the two parties is clear and synergistic: LG Chem supplies large-scale, high-quality C3-derived IPA feedstock, resolving bottlenecks in premium raw material supply; Jianghuawei leverages its domestic technical expertise, production capabilities, and distribution channels to perform high-purity refining and market deployment—while also engaging in technology exchange, information sharing, and joint marketing efforts, with a particular focus on advanced semiconductor customers such as AI chips and HBM (High Bandwidth Memory) devices. Currently, multiple Chinese enterprises have achieved mass production and strategic deployment of high-end IPA. Companies including Binzhou Zaiyuan Yuneng, Jiangsu Danuoer, Lianshi New Materials, Jianye Chemical, and Jianghuawei can all produce G5-grade high-purity isopropyl alcohol. Meanwhile, Jingrui Electronic Materials, PetroChina Jinzhou Petrochemical, Boyang Co., Ltd., and Jiangsu Xingfu Electronics are also intensifying their investments in this sector. Nevertheless, the industry still faces challenges—including unstable raw material supply and insufficient capacity for large-scale, reliable delivery. The Sino-foreign cooperative model effectively alleviates these pain points and accelerates the localization substitution of high-end IPA. Jianghuawei’s 2026 semi-annual report reveals that the company achieved revenue of RMB 680 million in the first half of the year—a 17.22% year-on-year increase—while attributable net profit amounted to RMB 46.94 million, down 2.36% year-on-year; non-recurring net profit also declined slightly. Steady revenue growth coupled with margin pressure vividly reflects intensifying competition and mounting cost pressures across the high-end fine chemical sector. Binding a stable upstream raw material supply chain will thus significantly help the company reduce costs, improve efficiency, expand into premium markets, and consolidate its core competitiveness. AI + memory capacity explosion! High-end fine petrochemicals unlock incremental growth dividends Both parties have identified AI chips and HBM as core target customers—precisely aligning with the current expansion wave sweeping the semiconductor industry—and thereby opening up entirely new growth avenues for high-end fine petrochemical materials. In recent years, the explosive growth of the AI server market has continuously expanded production capacity for advanced logic chips and high-bandwidth memory devices, driving parallel surges in demand for electronic chemicals across the entire wafer fabrication value chain. HP-IPA—an indispensable cleaning solvent for advanced nodes—directly benefits from this expansion of high-end semiconductor capacity, resulting in sustained market demand growth. As a global hub for semiconductor manufacturing, China continues to ramp up investment in AI chips and memory industries, offering vast market opportunities for domestically produced high-end electronic-grade petrochemical materials. This collaboration also marks a key strategic move by LG Chem to deepen its footprint in China’s semiconductor materials market. As early as July this year, LG Chem began commercial supply of semiconductor stripping agents to Amkor Technology, officially launching its semiconductor materials business in the market. Per its corporate strategy, LG Chem plans to further strengthen its portfolio of high-value-added products, aiming to raise the share of high-value-added business revenue to over 25% by 2030. High-purity, semiconductor-grade IPA sits squarely at the heart of LG Chem’s strategic positioning in the premium materials segment.

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