Shares of Sumitomo Chemical India Ltd experienced a significant surge, climbing over 10% to reach a high of Rs 488.50 on Friday. This rally was primarily fueled by a strategic announcement from its Japan-based parent company, Sumitomo Chemical Co Ltd.
Joint Venture for Next-Gen Semiconductors
Sumitomo Chemical Co disclosed that its wholly-owned South Korean subsidiary, Dongwoo Fine-Chem Co Ltd, has entered into an agreement with Samsung Electro-Mechanics Co Ltd to establish a new joint venture (JV). This JV is set to focus on the manufacturing of glass core substrates, a crucial component for advanced semiconductor packages.
The establishment of this new company is anticipated in 2026, pending the completion of necessary regulatory approvals. The collaboration aims to combine the technological expertise of both companies to innovate in the semiconductor industry.
Addressing Growing Demand for High-Performance Computing
The demand for semiconductors has intensified due to the rapid adoption of generative AI, increased investments in data centers, and the rising need for high-performance computing. This necessitates greater integration and lower power consumption in chip technology.
Glass core substrates have emerged as a pivotal technology to support next-generation semiconductor packages, enabling further increases in size and density. The new JV plans to establish a robust supply system by the second half of fiscal 2027, with a gradual expansion of its supply capacity thereafter to meet global demand.
Market Reaction and Trading Volume
Back in India, Sumitomo Chemical India's counter witnessed exceptionally high trading volume following the news. Approximately 3.92 lakh shares were traded on the BSE, a substantial increase compared to the two-week average volume of 18,000 shares. The turnover for the counter stood at Rs 18.65 crore, contributing to a market capitalization of Rs 23,949.01 crore for the Indian entity, where its Japanese parent holds a 75% stake.