//How Japanese Rubber Company Became a Linchpin of The Tech Industry
Japanese rubber Company

How Japanese Rubber Company Became a Linchpin of The Tech Industry

When Japan chose to pick a battle with South Korea last month, it dug deep to impose sanctions few have ever heard of.

The most powerful weapon at Tokyo’s effort against its neighbor proven to be a half dozen or so niche companies with titles such as JSR Corp., Shin-Etsu Chemical Co. and Tokyo Ohka Kogyo Co.. They make fluorinated polyimide, hydrogen fluoride and photoresist: fundamental ingredients for the production of their displays and semiconductors that go into each piece of contemporary consumer electronic equipment, from Apple Inc. iPhones and Dell Technologies Inc. laptops into the full selection of Samsung Electronics Co. apparatus.

How can they become so indispensable? And how can they manage to remain on top even after their customers ceded the display and processor markets to Taiwanese and South Korean rivals? The solution lies in a run of investments combined with a willingness to explore markets and an unceasing refinement match and of producing criteria too exacting to try.

The story of the JSR chairman shows just how hard it would be for a newcomer to fill the shoes of these suppliers. Koshiba spearheaded the company’s pivot a liquid used to imprint circuits as a few strands of DNA onto silicon wafers in a process called lithography, into photoresists. Gadgets keep more economical, more powerful and getting slimmer because processor companies have the ability to etch smaller circuit patterns on silicon. When it comes to the most advanced chip processes, JSR is.

The biggest company of the company was tire rubber, After the 25-year-old Koshiba joined JSR in 1981. Photoresist at that time used resins which JSR had access to for its business, as fortune would have it, and the company saw an opportunity to break to a growth industry. Japanese semiconductor makers were beginning their rise to dominance, and suppliers were positioning themselves to go along for the ride.

The problem for JSR was that it didn’t belong to some of the local keiretsu, a grouping of suppliers that receives preferential access. Along with the company was up against Tokyo Ohka, or TOK. By the mid-1980s, TOK commanded as much as 90 percent of their market.

JSR’s decision was bold, but Koshiba seemed like the right man for the job. Hewas one of the few English speakers in the business’d spent two decades studying materials science at the University of Wisconsin-Madison on a Rotary Club scholarship and was excited to work abroad. JSR sent him to establish a photoresist venture together with biopharmaceutical giant UCB SA. The goal was to target the American marketplace.

As timing would have it, JSR was moving overseas as Japan was approaching the summit of its semiconductor prowess. That Exact Same year, NEC Corp., Toshiba Corp. and Hitachi Ltd. were the world’s biggest chipmakers, pushing aside Intel Corp. and Texas Instruments Inc.. Companies occupied six places in the industry’s top 10 ranking a degree of concentration that hasn’t been matched by any country as, by earnings, according to IC Insights.

Japan’s seemingly unshakable charge of the computer memory market prompted right-wing politician Shintaro Ishihara and Sony Corp. co-founder Akio Morita to pen”The Japan That Can Say No,” a book arguing for a more muscular foreign policy. In an eerie echo of recent events, the authors contended that the Japanese authorities had the power to ascertain the outcome of the Cold War just by directing its national businesses to market the processors used in intercontinental ballistic missiles to the Soviets rather than the U.S.

Before that theory could be analyzed However, the Cold War finished. Over the following decade, private computers overtook ICBMs as the primary destination for need and chips altered to market low unit prices over quality. From 2006, Samsung had risen to No. 2 on the list of the planet’s largest chipmakers, with South Korean compatriot SK Hynix Inc. standing seventh and just three Japanese names staying among the top 10.

For JSR, the turning point came in 2000. Koshiba, who had been established in California at the time, recalls being dragged sporting shorts and a T-shirt. Word was a company was about to clinch a deal with IBM for joint research on a photoresist material that is next-generation. “Get it back,” he was told. Koshiba leaned about the community of American industry contacts he had spent a decade building, individuals who’d known him through the worst of U.S.-Japanese commerce tensions. Within a month, IBM signed with JSR.

In lithography, the formulation for transistors has only two levers: boost the power that is lighting or use a lens that allows more light through. Every time the processor procedure shifts to a band of light, resist makers have to return to the drawing board, starting up opportunity. Since integrated circuits replaced vacuum tubes in the 1970s the fourth such change was ushered in by the research partnership with IBM, also JSR rode it.

The company now commands about 40 percent of this market for the generation of withstand used in mass manufacturing. Additionally, it supplies more than 30 percent of the photoresist for 3D NAND, the most advanced flash memory chips, that are among the product lines where Japan and competitions still compete. JSR is expected to generate five times the profit and about three times the earnings that it did in the.

Why is this business inaccessible to newcomers is the amount of purity and quality required by customers. TOK claims a single drop of coffee in two swimming pools could be regarded as an unacceptable flaw. The analogy of JSR is to a handful of golf balls that are corrupt having the ability to spoil a batch the magnitude of the Japanese archipelago.

Besides being challenging, the markets do not promise growth and these companies operate in are modest. According to research firm Fuji Keizai Group, the industry’s sales rose just shy about 8 per cent last year to $1.3 billion. Koshiba jokes that even the market for ramen noodles is significantly bigger than that.

“These materials are used in these moderate amounts this to rebuild the entire infrastructure is probably not worth the investment.”

And that’s the irony of the present situation. By stoking commerce tensions, its neighbor to subsidize contest to JSR and TOK that wouldn’t make sense under market conditions may be encouraged by Japan. It is a matter of survival: Korean corporations depend on Japan for over 90% of of the fluorinated polyimide and resists that they need, and 44 percent of hydrogen peroxide requirements prices.

For the time being, JSR and TOK retain dominance over one material that keeps the consumer electronics industry. But one of Japan’s last strongholds of sector domination may be under threat.

“They got the engineers, and once national pride is concerned they can possibly make it even if it loses money,” Koshiba stated. “We do not have an impregnable wall.”