Shares of Japan’s leading chemical manufacturers slid on Thursday after China’s commerce ministry announced an anti-dumping investigation into imports of key chipmaking chemicals from Japan, a move that rattled investors and sent Chinese rivals sharply higher.
The market reaction underscored both the strategic importance of semiconductor materials and the growing role of geopolitics in shaping winners and losers across Asia’s technology supply chain.
In Tokyo, Shin-Etsu Chemical fell 3.4%, marking one of its sharpest single-day declines in recent months. Mitsubishi Chemical slipped 0.5%, broadly tracking the Topix index but still under pressure amid uncertainty over potential fallout from the probe.
A spokesperson for Shin-Etsu said the company was investigating the issue and stressed that any impact on revenue or expenditure was unlikely to be significant.
Japanese firms have long dominated the global market for high-purity materials used in semiconductor manufacturing, including specialty gases, silicon wafers, and advanced precursor chemicals. Their strength lies not in volume, but in precision, reliability, and decades of accumulated process know-how. For chipmakers, especially at advanced nodes, consistency in materials such as dichlorosilane is critical, as even minor impurities can affect yields and performance.
That dominance is precisely what China has been trying to erode as it seeks to build a more self-sufficient semiconductor ecosystem. Beijing’s decision to open an anti-dumping probe into dichlorosilane imports fits squarely into that strategy. Dichlorosilane is a key precursor used in thin-film deposition processes, an essential step in producing semiconductors for logic, memory, and power devices.
According to China’s commerce ministry, the investigation was launched following complaints from domestic producers. These companies argue that imports from Japan rose steadily between 2022 and 2024, while prices fell by a cumulative 31%, undercutting local suppliers and harming their operations. If the probe ultimately results in duties or other restrictions, it could tilt the competitive landscape in favor of Chinese manufacturers, at least in the domestic market.
Investors moved quickly to price in that possibility. In mainland China, shares of Tangshan Sunfar Silicon Industries surged by their daily limit of 10%. Hubei Heyuan Gas, which produces silicon-based functional materials used in chipmaking, also jumped 10%. Jiangsu Nata Opto-Electronic Material gained 3%, extending a broader rally in stocks linked to semiconductor self-sufficiency.
The sharp divergence in share price performance highlights how trade actions are increasingly being read not just as regulatory measures, but as industrial policy signals. For Chinese materials makers, the probe reinforces expectations of policy support and reduced foreign competition, while it introduces another layer of risk for Japanese exporters in a market that has been both lucrative and strategically sensitive.
The investigation comes amid visibly strained relations between China and Japan, and at a moment when technology, security, and trade issues are becoming ever more intertwined. Earlier this week, Beijing announced a ban on exports of certain dual-use items to Japan, further heightening tensions. While Chinese authorities frame the dichlorosilane probe as a standard trade remedy case, markets are clearly viewing it through a geopolitical lens.
Political frictions have intensified since Japanese Prime Minister Sanae Takaichi said in November that a Chinese attack on Taiwan threatening Japan’s survival could trigger a military response. Beijing condemned the remarks as “provocative,” and relations have since cooled. Against that backdrop, trade actions affecting strategically important sectors such as semiconductors are unlikely to be seen as isolated events.
For Japan’s chemical giants, the immediate financial impact may be limited, particularly given their diversified global customer base and strong pricing power at the high end of the market. Analysts note that replacing Japanese suppliers entirely would be difficult for many chipmakers, given the stringent quality requirements involved. Still, the probe raises longer-term questions about market access and the pace at which Chinese competitors could close the technology gap with policy backing.
More broadly, the episode illustrates the shifting fault lines in the global semiconductor supply chain. As China accelerates efforts to localize critical inputs and reduce dependence on foreign suppliers, companies that once seemed insulated by technical complexity are finding themselves exposed to trade and political risk. The development sends a clear message to investors in the chip industry that materials are no longer just a niche segment of the value chain, but a frontline in economic and strategic competition.
