A sudden disruption in the supply of CMP (chemical mechanical polishing) slurry from Japan's AGC has sent shockwaves through China's semiconductor industry. On July 1, a leading Chinese chipmaker issued an internal alert: only 267 barrels of the critical DST slurry—produced by AGC in Taiwan—remain in stock, enough for just five months of production at its Fab1 facility. The halt follows Taiwan's new export controls, cutting off access to this ultra-high purity material essential for advanced nodes at 7nm and below.

DST slurry, with a purity level nearing 99.9999%, is a vital consumable in the CMP process, a precision “planarization” step that ensures each chip layer is perfectly smooth and defect-free. In chipmaking, even a 0.1nm surface irregularity can derail photolithography and render an entire wafer unusable. The slurry combines nano-scale abrasives, chemical agents, and deionized water, playing a key role in both logic and memory chip production—especially as nodes shrink and stacking complexity increases.

In response to the supply cut, Chinese fabs are scrambling to validate domestic substitutes and negotiate possible relocation of production from Taiwan to Japan. The disruption is also accelerating efforts by Chinese companies to break foreign dominance in this strategic segment.

The CMP slurry market has long been dominated by American and Japanese firms. U.S.-based Cabot Microelectronics holds 33% of global share, while Japan's Showa Denko (Resonac) and Fujimi account for another 23%. China's domestic producers, including Anji Microelectronics, Scomi, and Dinglong, collectively hold just 25–30%, with significantly lower penetration in high-end applications below 28nm.

According to TECHCET, the global CMP slurry market reached $1.89 billion in 2021 and is projected to grow to $2.6 billion by 2026. In China, the market stood at RMB 2.3 billion in 2023 and is expected to double to RMB 4.6 billion by 2028—a compound annual growth rate of 15%.

As demand for advanced chips and 3D NAND grows, the need for diverse and high-performance slurry formulations is rising sharply. For example, a 7nm chip may require up to 30 CMP steps, and next-generation 176-layer or 200-layer 3D NAND chips require twice the CMP volume compared to 2D NAND.

Among China's top contenders for replacing foreign slurry:

 ● Anji Microelectronics is the domestic leader in CMP slurry, with global share surpassing 5% in 2021 and China market share jumping from 20.9% in 2020 to 30.8% in 2021.

 ● Scomi Technology (via a Japanese subsidiary) supplies diamond slurries for hard materials like sapphire and SiC, serving key fabs including SMIC affiliates.

 ● Dinglong Co. leads in CMP pad production and offers bundled solutions (slurry + pad + cleaning fluid), aiming to improve both cost and process control.

Despite the urgent push for localization, challenges remain. CMP slurries require extreme precision—nano-abrasive particles must be uniformly dispersed, and chemical composition must be tightly controlled. Even slight deviations can cause wafer damage. As the supply crisis deepens, Chinese fabs face mounting pressure to close the gap quickly.

The AGC shutdown is exposing China's semiconductor materials vulnerability. Although short-term risks are high, the disruption may prove to be a turning point—accelerating domestic breakthroughs in a market expected to exceed RMB 20 billion. In the long run, the race to secure CMP slurry independence is no longer optional—it's an industry imperative.