A devastating fire and legal power play are rattling the semiconductor world.
The semiconductor industry has been hit with a series of unfortunate events that have sent shockwaves through the global supply chain. A fire at one of Japan’s most critical NF₃ plants has sounded alarm bells throughout the chip market. At the same time, the U.S. Department of Commerce has abruptly terminated a $7.4 billion research deal, a move labeled as unauthorized by Secretary of Commerce Howard Lutnick.
As the chip industry grapples with these changes, disruptions continue to arise, such as a missile strike damaging a facility in Mukachevo operated by Flex. Simultaneously, leaders in the high-end printed circuit board (PCB) market warn that the artificial intelligence (AI) and server buildouts are contributing to the possibility of a shortage. As the industry tries to grapple with these numerous events, organizations should take proactive measures to diversify supply and secure alternatives if specific components are more prone to unavailability risks.
A fire in Japan sparks supply chain fears
On August 7th, tragedy struck at Kanto Denka Kogyo’s NF₃ plant in Gunma Prefecture, northwest of Tokyo. A fire erupted, killing one worker and injuring another. The authorities quickly shut down operations at the facility after the blaze. One of the plant’s two production lines sustained partial damage as a result of the fire. The investigation into the cause of the fire is still pending, but Kanto Denka is working on gradually ramping up its processes as it rebuilds.
The shutdown of Kanto Denka Kogyo, a major NF₃ supplier controlling 90% of Japan’s output, has sent shockwaves across the semiconductor supply chain. NF₃, a crucial component in semiconductor equipment cleaning and etching processes, is used by major chipmakers like TSMC, Samsung, Micron, Kioxia, and Rapidus. The disruption could have far-reaching effects, with Japanese authorities already seeking backup supplies from South Korea.
One concern is around the supply for tungsten hexafluoride (WF₆), which is made from NF₃ and used to form the metal wiring for chips. With Mitsui Chemicals set to exit production in March 2026 because of rising costs and competition, Kanto Denka will become Japan’s sole major provider. This will put extreme pressure on companies like Rapidus, which relies solely on Kanto Denka as part of the country’s domestic semiconductor initiative.
Kazuyoshi Saito, senior analyst at Iwai Cosmo Securities, stated that if Kanto Denka remains closed for a prolonged period, “This may exacerbate a capacity squeeze at manufacturers that are operating at maximum utilization rates to meet artificial intelligence demand.”
The ongoing popularity of AI, the reigning ‘tech king,’ is already causing significant constraints across the global supply chain. Leaders in the PCB market are beginning to warn that the increased stress on high-end PCBs, low-CTE fiberglass fabrics, drilling tools, and HVLP copper foil is leading to increases in both price and lead times. With the additional stress of natural disasters and end-of-life (EOL) announcements, organizations need to be aware of these risks.
Diversifying your supplier base is a crucial risk reduction strategy, especially if your BOM is heavily reliant on sole sources. By expanding your sourcing network, companies can build resilience into their operations and avoid being blindsided by sudden disruptions like this.
Washington pulls the plug on a $7.4 billion chip deal
While Japan is dealing with supply chain fallout, the U.S. is currently navigating a mess of its own making. On August 25th, the Department of Commerce announced it was voiding a $7.4 billion research grant tied to the National Center for the Advancement of Semiconductor Technology (Natcast).
According to Commerce Secretary Howard Lutnick, the arrangement was “never legal in the first place.” Natcast, a nonprofit staffed with former Biden administration officials, didn’t have the authorization required under the Government Corporation Control Act. With questions swirling about oversight and conflicts of interest, the government decided to scrap the deal entirely. Control of the National Semiconductor Technology Center will now shift to the National Institute of Standards and Technology (NIST).
Previously, Natcast said it was aligned closely with the priorities of the White House, saying that it was “a linchpin to realizing a more prosperous, competitive, and secure leadership position for America.” Natcast has not immediately responded to a request for comment since Lutnick’s letter.
Since the Trump administration took office, concerns over the fate of the CHIPS Act and its funding have grown. This move, alongside other recent steps taken by the Trump Administration, continues to throw the U.S. semiconductor ecosystem into turmoil. The industry is at a crossroads as governments have recognized the need to support semiconductor initiatives in boosting domestic capabilities, but that also puts them at the mercy of shifting party agendas.
While the Trump Administration, like the Biden Administration, has prioritized semiconductors as a key to national security and economic success, the proposed 100% tariff on foreign semiconductors and the cancellation of funding could have the opposite effect.
Concurrently, geopolitical risks continue to disrupt the global supply chain. A recent missile strike on a U.S. electronics manufacturer, Flex, has reignited concerns about facilities in conflict-prone areas. For chipmakers, adaptability supported by a global team will be key to survival. Sourceability is here to help companies build smarter sourcing strategies, navigate regulatory challenges, and stay ahead in a market where the unexpected has become the norm.
Kathryn Ackerman is a senior copywriter with experience in the electronic components and tech industry. She works alongside Sourcengine’s experts and engineers to provide the latest and most accurate updates within the electronic components industry.
AloJapan.com