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 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.