Mitsui Chemicals shares fell 10.3% in Tokyo on Wednesday after reports that Japan Investment Corp., the state-backed fund that owns JSR, plans to sell the chip-materials maker to the company for more than 1.3 trillion yen ($8.2 billion). Nikkei Asia said that would make it the largest acquisition ever in Japan's chemicals sector.

Mitsui Chemicals said in a statement that it has been considering various possibilities, including buying JSR, to raise its corporate value, but that no decision has been made. Reuters, citing one of two people familiar with the matter, reported that a decision could come as soon as this month. JIC and JSR did not reply to Reuters' requests for comment.

A deal would reach well beyond Japan's chemicals sector. JSR is the world's second-largest maker of photoresist, the light-sensitive material chipmakers use to print circuit patterns onto silicon wafers, behind Japan's Tokyo Ohka Kogyo, according to Nikkei Asia. A sale would also give JIC its exit from a company it took private two years ago, at a time when spending on artificial intelligence has lifted the valuations of chip-related companies, Reuters reported.

Investors Balk at the Price Tag for JSR

Mitsui Chemicals closed at 1,856.5 yen, down 214 yen, after falling as much as 14% during the session, according to Kabutan market data. About 15.1 million shares changed hands, nearly nine times the volume of the previous session on Monday. The Nikkei 225 fell 1.4% on the day.

The slide left Mitsui Chemicals with a market value of about 708.4 billion yen at the close, Kabutan data showed. The reported price for JSR is more than 1.8 times that figure. Even before the drop, Reuters put the company's market capitalization at about 800 billion yen.

Funding is the main worry. Mitsui Chemicals held 217.8 billion yen in cash and cash equivalents against 876.4 billion yen of interest-bearing debt at the end of June, and its debt-to-equity ratio stood at 0.75, according to Reuters. Reuters quoted Tsutomu Yamada, an analyst at Mitsubishi UFJ eSmart Securities, as saying worries about the large amount of funding needed appeared to be behind the fall. He also said JSR's semiconductor strengths could raise Mitsui Chemicals' profile in the sector and lead to a re-rating of its shares.

Why JIC Is Selling JSR Now

JIC was set up in 2018 under the oversight of Japan's trade ministry to invest in companies that strengthen the country's competitiveness. It took JSR private in 2024 for about 900 billion yen, according to Reuters and the Sankei Shimbun; Nikkei Asia put the purchase above 1 trillion yen. At the time, the fund said it would use JSR to drive consolidation in semiconductor materials.

It has instead slimmed the company down. JIC has sold JSR's unprofitable businesses so that JSR can focus on chip materials, Nikkei Asia reported. JSR's own figures show the turnaround: revenue rose 13% to 440.7 billion yen in the year ended March 2026, and profit attributable to owners of the parent reached 59.3 billion yen, compared with a loss of 217.5 billion yen a year earlier.

The sale has been months in the making. Reuters reported in May that JIC was weighing a sale and that Fujifilm and Mitsubishi Chemical had expressed interest. Nikkei Asia said several companies, including foreign suitors, had approached JSR or considered a bid, and that JIC had also looked at relisting the company.

It is not the first such report. On Sept. 18, Mitsui Chemicals issued a statement responding to a media report that it was the final candidate to acquire JSR, saying only that the report had not come from the company. Wednesday's statement went further by acknowledging that a JSR purchase is among the options it is studying.

A Record for Japan's Chemical Makers

A deal above 1.3 trillion yen would surpass Showa Denko's purchase of Hitachi Chemical in 2020 for about 1 trillion yen, the current record in Japan's chemicals sector, according to Nikkei Asia. Hitachi Chemical was later combined with Showa Denko to form Resonac Holdings in 2023. Jiji Press reported that Mitsui Chemicals wants JSR to strengthen its semiconductor business, which it regards as a key growth area.

Scale is the industrial argument for the deal. Akira Minamikawa, an analyst at research firm Omdia, said AI is making the chip-materials market steadily larger, according to Reuters. “If you remain small you're going to become unable to address that growing market,” he said.

Japan's chip-equipment makers are already seeing that demand. Tokyo Electron last week forecast an 87% rise in operating profit for the year to March 2027, citing spending on factories for AI chips.

For Mitsui Chemicals shareholders, the question is how the purchase would be paid for, and on what terms. The company is scheduled to report first-half results on Nov. 11, according to Kabutan. If the timeline reported by Reuters holds, a decision on JSR could follow before the end of November.