Japanese Investment Corporation (JIC) offered a $6.4 billion buyout deal to the photoresist producer JSR. Is Tokyo trying to strengthen its position in the Artificial Intelligence (AI) chip war?
AI has gained mainstream attention with the advent of tools such as ChatGPT this year. Hence the demand for semiconductor chips, one of the basic requirements for the computation to train AI models, has also increased.
JSR Accepts Buyout Deal From State-Backed JIC Amidst AI Chip Wars
According to the Asia Times, JIC, a company that is 96.5% owned by the Japanese government, offered a buyout to JSR worth ¥909.3 billion ($6.4 billion). JSR is a photoresist producer with a global share of over 30%, serving clients like Intel, Samsung, and Taiwan Semiconductor Manufacturing Company (TSMC).
The photoresist is a chemical used in printing circuit design on-chip wafers.
JIC would acquire a 100% stake in the company, taking it private by early 2024. After regulatory approval, the deal would go through a 20-day tender offer period in December 2023.
National Champion Element?
As JSR has a strong balance sheet, many experts believe it does not need additional funds from JIC. The development is amidst the ongoing chip wars as the US plans to halt the export of powerful AI chips to China.
Financial Times mentioned that a semiconductor analyst Damian Thong believes that there is not much detail available about the buyout. He said, “There was a feeling that we weren’t supposed to get to the bottom of this.”
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Another analyst finds it unclear whether the deal is privatizing or nationalizing an important strategic asset. They told FT:
“There may be some sort of national champion element to this, and once you start empire building for non-economic reasons, anything is possible.”
However, the CEO of JSR, Eric Johnson, denied the nationalization angle. He explained:
“Their [JIC’s] charter is to support an acceleration of competitiveness, and global competitiveness of Japan industry.”
The rising popularity of AI in 2023 and the demand for semiconductor chips have led to the stock of the chipmaker Nvidia hitting a $1 trillion valuation.
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