Material Insights · Understanding the Material World

Semiconductors and Ultra-pure wet chemicals

Fabs clean, etch and strip wafers many times over with ultra-pure acids, peroxide and solvents, so these chemicals are made close to the big fab clusters in Taiwan, Korea, Japan and China; a new fab region such as India must import them or persuade suppliers to build locally.

Semiconductors (industry) and Ultra-pure wet chemicals (chemical): 4 relationships.

How they are linked

1. Industry input

Physical flow · Strong · Ultra-pure wet chemicals → cleaning, etching and plating

Wafers are cleaned and etched between many process steps, and any trace metal or particle left behind lowers yield, so fabs need acids, hydrogen peroxide and solvents purified far beyond industrial grade; four enterprise types in semiconductors depend on them, rated up to 5 of 5.

  • 4 enterprise types that depend on them
  • 5 of 5 highest criticality, contract foundries

Foundries rate them 5 of 5 for cleaning and etching, and memory makers, electronic chemical suppliers and package substrate makers 4 of 5, the last for plating and etching. Solvay notes that electronic-grade hydrogen peroxide is used to clean wafers, and the high-purity chemicals Sumitomo Chemical plans to supply to India's Dholera fab include sulphuric acid and isopropyl alcohol. Every change of material must be requalified by the fab, so switching supplier is slow even where the base chemical is a commodity.

Enterprise types that depend on it:

  • Contract foundries: cleaning and etching (criticality 5 of 5)
  • Electronic chemical and specialty gas suppliers: core product (criticality 4 of 5)
  • Integrated device makers and memory makers: cleaning (criticality 4 of 5)
  • Package substrate and lead-frame makers: plating and etching (criticality 4 of 5)

Sources: Material Insights; Solvay; Indian Chemical News

2. Fab output drives demand

Transition · Rising · Chip output → wet chemical demand

Wet chemical use scales with wafer starts and the number of process steps, so it grows with fab capacity.

  • $45.8 billion wafer fab materials revenue, 2025, up 5.4%
  • $21.7 billion semiconductor materials revenue in Taiwan, the largest market, 2025

SEMI reported that wet chemicals, with lithography materials, posted strong double-digit growth in 2025, faster than wafer fab materials as a whole. Suppliers expand next to the fabs: Solvay said in September 2026 that its Taiwan joint venture Shinsol Advanced Chemicals will more than double its electronic-grade hydrogen peroxide capacity by the end of 2026.

Sources: SEMI; Solvay

3. Suppliers cluster in East Asia

Geography and ownership · Strong · East Asian fab clusters ↔ their chemical suppliers

Fabs need reliable, qualified deliveries in large volumes, so ultra-pure chemical production tends to sit in the same countries as the fabs, and the main fab regions are also the main supply bases.

  • $15.6 billion semiconductor materials sales in China, 2025
  • $11.2 billion semiconductor materials sales in South Korea, 2025
  • 86% lower Korean imports of hydrogen fluoride from Japan in 2020 than in 2018

The concentration was tested in July 2019 when Japan tightened export licensing of high-purity hydrogen fluoride, photoresist and fluorinated polyimide for Korea. Korean purifiers such as Soulbrain expanded and imports of Japanese hydrogen fluoride collapsed, then rose 34% in 2021 as chip demand grew, showing that local supply can be built but cross-border ties persist.

Sources: SEMI; Asia Economy; Asia Economy; The Daily Star (Reuters)

4. Localisation for new fab regions

Policy · High in India · Fab subsidies → local chemical supply

Governments building a chip industry find that fabs need local ultra-pure chemical supply, so they court chemical makers alongside chipmakers.

In India, Tata Electronics signed an MoU with Merck Electronics in September 2025 covering high-purity electronic materials and chemical delivery systems for its Dholera fab, and one with Sumitomo Chemical in 2026 under which Sumitomo would supply photoresists, functional chemicals and high-purity chemicals to the fab and explore making them in India. Indian chemical firms such as Tata Chemicals are scaling up high-purity etching and cleaning chemicals, which India has historically imported, mainly from Japan and the United States.

Sources: Indian Chemical News; The Tribune (ANI); Tata Electronics

For investors

Key learnings

  1. Wet chemical demand follows wafer starts and process complexity, so it grows with fab capacity and grew at double digits in 2025.
  2. Purity and qualification, not the base chemical, create the value: suppliers that are qualified at a fab keep the business for years.
  3. Capacity is added next to fab clusters, as with Solvay's plan to more than double its Taiwan peroxide capacity by the end of 2026, so suppliers follow fabs into new regions once volumes are committed.

What to track

  • Semiconductor materials revenue by segment and region: Where wet chemical demand is growing (Yearly · SEMI)
  • Wafer fab equipment spending and new fab starts: Future demand for ultra-pure chemicals 1 to 2 years ahead (Quarterly · SEMI World Fab Forecast)
  • Capacity announcements by electronic chemical makers: Supply following fabs into new regions (As announced · company releases)

For policymakers

Key learnings

  1. India's fabs will need qualified ultra-pure acids, peroxide and solvents from day one, and these have so far been imported.
  2. MoUs with Merck and Sumitomo are a start; firm local plants depend on enough committed fab volume to justify purification capacity.
  3. Korea's 2019 experience shows a single supplier country can be a chokepoint, so India should qualify more than one source per chemical.

What to track

  • Imports of electronic-grade chemicals by source: India's dependence on Japan, the US and others (Monthly · DGCI&S, Ministry of Commerce)
  • Local electronic chemical plants approved or started: Progress on domestic supply for Indian fabs (As announced · India Semiconductor Mission, company releases)

India

India has historically imported semiconductor-grade cleaning and etching chemicals, mainly from Japan and the United States; Tata Electronics' Dholera fab has MoUs with Merck and Sumitomo Chemical for supply and possible local production.

Sources

  1. Semiconductors: materials, Material Insights (2026)
  2. Global semiconductor materials market revenue reaches record $73.2 billion in 2025, SEMI (2026)
  3. Solvay significantly expands electronic grade hydrogen peroxide capacity in Taiwan, Solvay (2026)
  4. Tata Electronics secures critical material supply for Dholera fab through Sumitomo Chemical pact, Indian Chemical News (2026)
  5. 3 years of Japan's export restrictions: Korea's localisation efforts stagnant, Asia Economy (2022)
  6. Japan grants additional permission for hydrogen fluoride exports... what's behind it?, Asia Economy (2020)
  7. The high-tech trade dispute rooted in Japan's wartime history (Reuters explainer), The Daily Star (Reuters) (2019)
  8. Indian chemical firms step up to fuel self-reliance in semiconductor manufacturing: report, The Tribune (ANI) (2025)
  9. Tata Electronics and Merck Electronics sign memorandum of understanding to strengthen semiconductor capabilities in India, Tata Electronics (2025)