Resonac Holdings is studying deal structures for a possible acquisition of government-owned chip linchpin JSR, a key step in the chemicals maker¡¯s ambition to corner the Japanese artificial intelligence semiconductor materials market.

Now controlled by state-backed Japan Investment Corp. (JIC) following a $6 billion buyout, JSR is the world¡¯s largest maker of photoresists ¡ª a light-sensitive material crucial for mapping circuit patterns onto silicon through a process called lithography.

¡°We¡¯ve become overwhelmingly strong in many chip chemicals, but we don¡¯t own one for lithography,¡± Resonac Holdings Chief Executive Officer Hidehito Takahashi said in an interview. ¡°We need that to be able to say we are a Japan-born specialty chemicals company with a substantial global market presence.¡±

The 62-year-old executive last year said Resonac hopes to be involved when JIC exits JSR. On Wednesday, Takahashi said he¡¯s doing ¡°mental exercises¡± and simulating potential deal structures and the partners that such a move might require.

Shares of Resonac erased gains and fell 3% on the news.

The bulk of the world¡¯s photoresist is made in Japan, home to JSR competitors Tokyo Ohka Kogyo, Fujifilm Holdings as well as Sumitomo Chemical. The JSR buyout, blessed by the country¡¯s economy ministry, was aimed at kicking off much-needed consolidation.

¡°Japan should have far fewer photoresist makers because the market size is not big enough to keep all of them profitable,¡± said Bloomberg Intelligence analyst Masahiro Wakasugi.

Takahashi said he¡¯s ready to bet big on JSR should an opportunity present itself, although he may not be as bold as in the $7 billion deal he orchestrated for Hitachi Chemical in 2020. At that time, Hitachi Chemical¡¯s value was twice that of Showa Denko, Resonac¡¯s precursor. JIC has said the fund will seek to sell JSR shares in five to seven years.

¡°As long as it¡¯s a price that I can defend to our shareholders, I¡¯m willing to explore various frameworks to make a deal happen,¡± Takahashi said.

The Tokyo-based company is a supplier of crucial materials used to make cutting-edge semiconductors that underpin AI. The company, once known for traditional materials such as graphite, has been overhauling its business portfolio to focus on chip-related products, such as nonconductive film and thermal interface materials needed to yield reliable production of high-bandwidth memory.

¡°I want JIC and the Japanese government to know that we are the best partner for JSR and for shoring up the country¡¯s chip material industry,¡± Takahashi said.