Middle East supply disruption crisis spreads to semiconductors: Key photoresist solvents PGME and PGMEA in urgent shortage, Japanese chip material giants sound the alarm.

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Japanese photoresist suppliers are issuing warnings to chip manufacturers about a shortage of key raw materials, as the global semiconductor supply chain faces a new geopolitical stress test.

According to South Korean tech media The Elec, the Strait of Hormuz has been effectively blocked since early March this year, leading to a significant tightening of naphtha supply. Naphtha is a core raw material for specialty chemicals used in semiconductor production. Its shortage has prompted major Japanese photoresist suppliers to issue or prepare to issue procurement warnings to customers such as Samsung Electronics and SK Hynix.

This supply disruption is particularly pronounced for advanced manufacturing processes. The report cites analysis predicting that the shortage will have the biggest impact on advanced nodes reliant on extreme ultraviolet (EUV) lithography technology, with Korea being one of the world's largest markets for photoresists. At present, semiconductor manufacturers generally maintain several months’ worth of safety stock. Some U.S. alternative supplies might support about six months of chip output, but medium- to long-term risks remain significant.

Supply Chain Transmission Path: From Naphtha to Photoresist

The root of this shortage lies in a clear chain of transmission within the chemical industry.

Naphtha, after high-temperature cracking, can produce intermediates such as propylene, which are then used to manufacture propylene oxide (PO). PO is the key precursor to synthesizing PGME (propylene glycol monomethyl ether) and PGMEA (propylene glycol monomethyl ether acetate). Both of these solvents are currently in short supply.

PGME and PGMEA have broad applications in semiconductor manufacturing, involving photoresist, thinners, bottom anti-reflective coatings (BARC), spin-on hard masks (SOH), as well as temporary bonding adhesives used in high-bandwidth memory (HBM) packaging and other materials.

Japan is currently over 40% dependent on Middle Eastern naphtha, and this highly concentrated supply structure makes it especially vulnerable in the context of the Strait of Hormuz disruption.

Major Japanese Suppliers Warn Samsung and SK Hynix

Japanese suppliers providing these materials to Samsung Electronics and SK Hynix include Shin-Etsu Chemical, Tokyo Ohka Kogyo, JSR Corporation, Fujifilm, and Nissan Chemical.

These companies have already notified or are preparing to notify customers that raw material procurement faces the risk of disruption. This means that the supply stability of photoresist and related semiconductor materials is under direct threat from upstream geopolitical conflicts.

Alternatives Exist but Are Hard to Switch to in the Short Term

Facing supply pressure, Japanese photoresist and related materials manufacturers are considering procuring PGME and PGMEA from Korea or China. However, this option faces a major obstacle—the Process Change Notification (PCN) procedure.

Once the source of raw materials changes, Samsung and SK Hynix will have to requalify the relevant products—a process that usually takes about a year, and for advanced processes may take even longer. This means switching suppliers is not a solution that can be implemented in the short term, and the fragility of the supply chain will persist for a considerable period.

Inventory Buffer and Localization Trends Provide Partial Hedge

Despite rising risks, there is still some buffer in the market. Semiconductor manufacturers usually maintain stockpiles of key materials ranging from a few weeks to several months. Coupled with some U.S. alternative supplies, chip output could be sustained for about six months. TSMC, for example, is reportedly continuing to promote supply diversification strategies and has established a global supplier system.

Meanwhile, the localization process of China’s chip supply chain may partially hedge against the potential impact of a global photoresist shortage. Domestic enterprises, including Xuzhou Bokang Chemical, are steadily expanding production capacity in the photoresist sector. This trend is expected to provide relatively independent supply assurance for Chinese domestic chip manufacturers.

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