SK Materials, Showa Denko to jointly seek US semiconductor gas business

SK Materials Co., an industrial gas manufacturing affiliate of South Korea’s SK Inc., and Japanese chemicals company Showa Denko K.K. have agreed to jointly seek business opportunities in the US semiconductor materials market.

SK Materials and Showa Denko on Wednesday signed a memorandum of understanding on business cooperation in producing special gases used in chip manufacturing processes.

Under the initial agreement, the two companies plan to build a factory in the US to produce high-purity gases to meet growing demand from chipmakers in North America.

US semiconductor manufacturers are striving to ensure stable procurement of such gases as the supply of industrial gases for wiring, a front-end semiconductor process, is tight, the two companies said.

The move to build a plant in the US also comes as the Joe Biden administration is inviting non-US companies to heavily invest in the country while providing them with incentives and tax benefits to create jobs and strengthen US firms’ technological capabilities.

Showa Denko is the global top producer of etching gases used to carve fine grooves and holes on the surface of wafers to design electronic circuits.

SK Materials is also one of the world’s leading semiconductor gas producers.

The Korean company mainly produces nitrogen trifluoride (NF3), which is used to remove residue on the internal walls of chemical vapor deposition chambers; and silane (SiH4), used to deposit silicon on semiconductor wafers and flat-panel glass substrates.

MORE JOINT VENTURE PROJECTS

“SK and Showa Denko will have in-depth discussions on ways to expand our partnership in the US,” said SK Materials Chief Executive Lee Young-wook.

Back in 2017, the two companies established a joint venture, SK Showa Denko Co., to produce a high-purity gas for 3D NAND chips in Korea. The JV is constructing a new plant in Korea to produce industrial gases for next-generation memory chips. The construction work is expected to be completed in July.

SK Inc., the investment and holding company of Korea’s SK Group, last December absorbed SK Materials and hived off a new industrial gas-producing company, SK Specialty, and placed it under the merged entity as a wholly owned subsidiary.

SK Inc. also said at the time it would invest $4.3 billion in next-generation technologies for advanced materials.

The merger was part of the group’s broader restructuring aimed at strengthening Group Chairman Chey Tae-won’s management control over affiliates.

Chey has said that SK Inc., formerly known as SK Holdings Co., needs to transform into a “value investor," just like Warren Buffett’s Berkshire Hathaway Inc., by focusing its resources on growth sectors.

Write to Jeong-Min Nam at Peux@hankyung.com
In-Soo Nam edited this article.