Formosa Plastics and Daicel Launch Chip Materials Joint Venture in Taiwan

New Partnership Targets Critical Chip Material

Formosa Plastics Corp and Daicel Corp have established a 50-50 joint venture to manufacture electronic-grade photoresist thinner, a critical chemical used in advanced semiconductor fabrication. The partnership announced this week reflects growing confidence in Taiwan's position as a semiconductor materials hub amid surging AI-related chip production.

Formosa Daicel Advanced Chemicals Co Ltd launched with NT$800 million in paid-in capital, split evenly between the two partners. The facility will rise at Formosa Plastics' existing Kaohsiung site in Renwu District, leveraging the conglomerate's established infrastructure for materials procurement and utilities.

The venture plans to achieve mechanical completion by September 2028, with commercial production starting three months later in December of that year.

Closing Taiwan's Supply Gap

Electronic-grade photoresist thinner plays a central role in lithography processes that pattern chips. Taiwan consumed roughly 113,000 tonnes of the material last year while domestic production reached only 100,000 tonnes, according to Formosa Plastics' internal evaluation.

The shortfall has been filled by purification companies that import lower-grade industrial product and refine it locally. The new joint venture aims to establish a fully domestic supply chain, reducing reliance on imported feedstock and multi-step processing.

Daicel brings specialized chemical manufacturing expertise, while Formosa Plastics contributes scale, land, and integration with Taiwan's petrochemical sector. The collaboration mirrors a broader trend of Japanese chemical firms partnering with Taiwanese manufacturers to capture semiconductor growth closer to end customers.

AI Boom Drives Demand Forecast

Formosa Plastics projects Taiwan's photoresist thinner consumption will reach 267,000 tonnes by 2030, implying an 18.8 percent compound annual growth rate. The forecast rests on continued expansion in AI accelerators, high-bandwidth memory, high-performance computing, and 3D NAND flash production.

Taiwan's semiconductor fabs have announced aggressive capacity additions over the past two years, driven by hyperscaler demand for AI training and inference chips. That buildout requires proportional increases in process chemicals, from photoresists and thinners to etchants and cleaning solvents.

The joint venture's initial output will address less than half of projected 2030 demand, leaving room for further capacity expansion or additional suppliers. Formosa Plastics has not disclosed whether the Kaohsiung plant design allows modular capacity increases beyond the first phase.

Regional Context and Supply Chain Resilience

The partnership underscores Asia's tightening integration in semiconductor materials supply. Japan remains the dominant producer of photoresist and related chemicals, while Taiwan commands the majority of advanced logic and memory fabrication. Joint ventures like Formosa Daicel Advanced Chemicals reduce lead times and logistics costs while insulating supply from geopolitical disruption.

Taiwan's government has prioritized localizing critical materials as part of its semiconductor resilience strategy. Electronic-grade chemicals, gases, and substrates have received targeted incentives to attract foreign partners and build redundant supply.

Kaohsiung's industrial zone already hosts petrochemical, refining, and specialty chemical operations, providing feedstock access and trained labor. The Renwu District site benefits from proximity to port facilities and pipeline connections to upstream producers within the Formosa Plastics Group.

As chip geometries shrink and layer counts rise, material purity and consistency become more critical. Photoresist thinners must meet stringent specifications for metal ion contamination, particle size, and volatility. Local production allows tighter quality control and faster response to fab process changes.

The venture represents a calculated bet that Taiwan's semiconductor expansion will continue at double-digit rates through the end of the decade, driven by AI workloads that show no sign of plateauing.