South Korea’s petrochemical industry, long mired in a downturn for commodity products, is now engineering a sweeping transformation into high-value semiconductor materials, riding the explosive growth of artificial intelligence (AI) chips and high-bandwidth memory (HBM). Moving beyond mass production of basic chemicals, major players are committing trillions of won in investment to reinvent themselves as advanced suppliers of critical semiconductor process materials.
According to industry sources on the 10th, major chemical companies including LG Chem, Lotte Chemical Group, OCI, and Samyang Group have embarked on aggressive capacity expansions and R&D initiatives spanning the entire semiconductor value chain — from advanced packaging materials and process chemicals to ultrapure water materials. The strategy is clear: escape the low-price onslaught from China by targeting segments where high technological barriers deliver margins far exceeding those of commodity products, securing new growth engines in the process.
LG Chem targets 2 trillion won in electronic materials, pursuing both packaging and process segments
LG Chem is making the most aggressive moves. The company has laid out a blueprint to double its electronic materials business — currently around 1 trillion won (approximately $663.2 million) — to 2 trillion won (approximately $1.3 billion) by 2030. As the proliferation of AI and high-performance computing (HPC) elevates the importance of semiconductor packaging, LG Chem is intensifying its focus on core materials such as copper-clad laminate (CCL), die attach film (DAF), and photo-imageable dielectric (PID).
The company is expanding beyond packaging materials into process chemicals as well. A prime example: LG Chem recently began mass production and supply of semiconductor stripper to U.S.-based semiconductor packaging and test company Amkor. Stripper is a high-purity chemical used to remove residual photoresist and contaminants from substrates after circuit patterning — a material whose importance surges as process nodes shrink.
To underpin these future businesses, LG Chem plans to invest a total of 15 trillion won (approximately $9.9 billion) in R&D by 2035, with approximately 70% allocated to future growth areas including semiconductors, mobility, and robotics materials. The company intends to accelerate the development of high-value technologies such as packaging adhesives, low-dielectric materials, thermal management materials, and glass substrates.
Lotte and OCI bet on expanding process chemical capacity
Lotte Chemical Group and OCI are ramping up production capacity for chemical materials used directly in semiconductor manufacturing processes.
Handuk Chemical, an affiliate of Lotte Chemical Group, held a groundbreaking ceremony last month at the Poseung industrial zone in Pyeongtaek, Gyeonggi Province, for a new plant producing TMAH (tetramethylammonium hydroxide) developer for semiconductors and displays. The company plans to invest a total of 130 billion won (approximately $86.2 million), expanding production lines in phases aligned with customer capacity increases. TMAH developer is a critical material used to etch microscopic circuit patterns onto semiconductor wafers, and Handuk Chemical supplies it to Samsung Electronics and SK hynix.
With this expansion, Handuk Chemical will operate dual production bases — its existing Ulsan facility plus the new Pyeongtaek plant — enhancing supply stability. Notably, the vertical integration spanning from Lotte Fine Chemical’s basic raw material (TMAC) to Handuk Chemical’s finished product (TMAH) also secures cost competitiveness.
OCI is rapidly scaling up production capacity across process materials including cleaning and etching. First, the company will expand annual production capacity for semiconductor-grade high-purity phosphoric acid from 25,000 tons to 30,000 tons within the third quarter of this year. High-purity phosphoric acid is a key material for wafer cleaning and etching processes, supplied to Samsung Electronics and SK hynix. For hydrogen peroxide, currently produced at approximately 125,000 tons annually across its Iksan and Gwangyang plants, OCI plans to raise facility utilization rates from around 70% to 90% in the second half to actively meet growing wafer cleaning demand.
OCI is also extending its influence in the semiconductor polysilicon business, a core raw material for wafers. Last year, the company broke ground on a joint venture plant in Malaysia with Japan’s Tokuyama, targeting an annual production capacity of 8,000 tons starting in 2029.
Ultrapure water and R&D investments also expanding
In the ultrapure water segment — an essential element for semiconductor fabrication plants — Samyang Group is standing out. The uniform-particle-size ion-exchange resins produced by Samyang Group’s Water Solutions division are high-value materials used in producing ultrapure water for semiconductors and displays. Their uniform particle size offers superior impurity removal compared to conventional ion-exchange resins. According to the company, this business has been growing over 10% annually in recent years, with demand expanding beyond semiconductor ultrapure water into diverse industries including chromatography and nuclear power.
R&D investment across the industry is also rising sharply. Lotte Chemical spent a total of 403.6 billion won (approximately $267.7 million) on R&D over the three years from 2023 through last year, concentrating most of its research on developing high-value specialty products. Kumho Petrochemical invested 194.8 billion won (approximately $129.2 million) in R&D over the same period, while Hanwha Solutions allocated 629.1 billion won (approximately $417.2 million) to cultivate high-value material businesses such as cross-linked polyethylene (XLPE) for extra-high-voltage cables.
An industry official commented, “With the proliferation of AI semiconductors, demand for materials across the entire semiconductor process — from advanced packaging to ultrapure water — is steadily increasing. High-value materials that require technological expertise offer higher profitability than general petrochemical products, which is why major chemical companies are cultivating them as future growth businesses.”