LG Chem to turn petrochemical plant into chip materials facility
LG Chem is planning to invest hundreds of billions of won to convert part of its petrochemical production complex into a semiconductor materials facility, accelerating its shift toward higher-value products as Chinese oversupply continues to squeeze South Korea’s chemical industry.
The proposed investment would be the company’s first major project funded by the 2.5 trillion won ($1.86 billion) raised through the sale of shares in its battery subsidiary LG Energy Solution last month.
According to industry sources on Tuesday, LG Chem is considering expanding production capacity for isopropyl alcohol (IPA) at its Yeosu complex in South Jeolla Province, using land currently occupied by a neopentyl glycol (NPG) production facility.
NPG is an additive used in paints and coatings, but its profitability has deteriorated sharply in recent years as surging Chinese production has driven down prices.
IPA, by contrast, is a higher-value chemical widely used in semiconductor manufacturing to remove microscopic impurities and residues from wafer surfaces.
LG Chem supplies the cleaning material to major global chipmakers, including Samsung Electronics, SK hynix and Taiwan Semiconductor Manufacturing Co. (TSMC).
The company, the world’s largest IPA producer by market share, currently manufactures 165,000 metric tons annually at its Yeosu plant.
The planned expansion would add tens of thousands of tons of capacity, strengthening its ability to supply high-purity IPA for semiconductor manufacturing.
According to SEMI, the global market for wet chemicals used in semiconductor cleaning and etching, including IPA, is projected to grow from $3.8 billion in 2025 to $6.5 billion by 2030.
The investment comes as South Korean petrochemical producers struggle with persistent oversupply from China and weakening profitability.
LG Chem, Lotte Chemical, Hanwha Solutions and Kumho Petrochemical all posted operating losses in the third quarter, despite a temporary improvement in industry conditions linked to the war in the Middle East.
The prolonged downturn is prompting major chemical manufacturers to accelerate their transition away from commodity petrochemicals toward specialty materials.
Lotte Chemical is expanding its high-performance engineering plastics business at the Yulchon Industrial Complex in South Jeolla Province.
Hanwha Solutions is shifting its focus toward high-performance resins and advanced materials for power cables, while Kumho Petrochemical is strengthening its businesses related to electric vehicles and batteries.
For LG Chem, the proposed IPA expansion represents a concrete step toward reducing its dependence on commodity chemicals and increasing its exposure to the growing semiconductor materials market.