The Kuchingite

A 🇯🇵Japanese giant's huge bet in Sarawak once plunged it into crisis.
Today, their partnership with a 🇰🇷South Korean competitor and the World Bank positions 🇲🇾Malaysia as the first South East Asian country to produce a key semiconductor material.

In 2008, Tokuyama chose Samalaju, Bintulu to build two solar-grade polysilicon plants worth about US$2.4 billion, lured by Sarawak’s abundant water and low-cost hydropower.

The first plant struggled with technical issues and failed to produce polysilicon of sufficient purity. A global oversupply, mainly from China, caused prices to crash, making the second plant unprofitable. By 2013, the project was reportedly losing around US$90 million a year.

In 2017, Tokuyama was in serious trouble and sold its entire Malaysian operation to South Korea's OCI for just US$98 million, less than 5% of its original investment.

Amazingly, OCI turned things around. Using its technical expertise, it achieved product purity, lowered costs, and produced other materials on-site. It positioned itself as a non-China, tariff-free supplier and leveraged Sarawak’s renewable energy to charge a ‘green’ premium. It grew into the world’s second-largest polysilicon producer and employed over 700 people locally.

Their success attracted more foreign companies into Sarawak-and even brought Tokuyama back!

In 2025, the 60th anniversary of diplomatic relations between Korea and Japan, a revitalised Tokuyama and OCI announced OTSM (OCI Tokuyama Semiconductor Materials), a joint venture to build the Southeast Asia’s first semiconductor-grade polysilicon plant in Bintulu.

On 30 March 2026, the World Bank’s private-sector arm, the International Finance Corporation (IFC), backed the project with a US$125 million (approximately RM502.7 million) loan, subject to strict environmental and governance conditions that OTSM, along with Sarawak, are well positioned to meet.

Despite Tokuyama’s earlier setbacks, the opportunity remains clear.

More than ever, semiconductors are essential to modern electronics, AI and robotics, and are at the center of trade wars and even potential military wars.

And semiconductor-grade polysilicon (as opposed to solar-grade), one of the purest materials on earth, is a vital component. Its production is dominated by China, followed by Germany, Japan, South Korea and the USA.

For Japan and South Korea, this partnership helps secure supply and reduce reliance on China, a geopolitical rival.

For Malaysia, it adds a vital component in its overall supply chain, and builds on its standing as the world's sixth-largest semiconductor exporter, with a 13% share of global assembly, testing, and packaging, while moving towards higher-value activities like chip design and innovation.

And Sarawak has no intention of just watching from the sidelines.