China’s Hold on the Acid That Etches AI Chips
Illustration: AIxEnergy
Global View Policy & Regulation Business & Finance

China’s Hold on the Acid That Etches AI Chips

Japanese and South Korean companies make the purest hydrofluoric acid used to etch AI chips, but most of the fluorine behind it comes through China. How the supply chain works, where it is exposed and what Washington can do about it.

Share this post
• Hydrofluoric acid (HF) is used repeatedly to etch and clean wafers for AI accelerators and high-bandwidth memory, and the Japanese and South Korean makers of the purest grades depend on fluorine that comes mostly from China and Mongolia.
• China mined 6 million of the world’s roughly 10 million tons of fluorspar in 2025, and China and Mongolia together mine about three quarters of it.
• South Korea’s response to Japan’s 2019 export controls moved purification onshore but left the conversion step dependent on China, and Korean purifiers began taking Chinese anhydrous HF in 2026.
• China’s January 2026 export ban on dual-use items bound for Japan leaves licensing officials wide discretion over anhydrous HF, and Beijing has halted sulfuric acid exports through 2026.
• The authors recommend financing fluorspar, anhydrous HF conversion and purification as one package, with offtake agreements, a stockpile and fluorine recovered from phosphate processing.

Chipmakers use hydrofluoric acid (HF) repeatedly to clean and etch wafers destined for AI accelerators and high-bandwidth memory. Japanese and South Korean companies make the highest-purity grades, but most of the fluorine they use comes through China.1 HF dissolves silicon dioxide while leaving silicon largely intact, so chip fabrication plants, or fabs, rely on it to strip oxide films and to clean wafer surfaces between process steps.2 The U.S. Geological Survey’s 2026 fluorspar summary names semiconductor etching and cleaning among the acid’s applications, though its main outlets are refrigerants, fluoropolymers and other fluorine chemicals.3 A Japanese industrial gas journal notes that HF is also the starting material for nitrogen trifluoride and tetrafluoromethane, which fabs use in plasma etching and to clean process chambers.4

0:00
/0:42
Article Summary

SEMI, the chip-equipment industry association, projected in October that worldwide spending on 300mm front-end fab equipment will reach $149 billion in 2026, 31 percent more than in 2025.5 In a June release, the association forecast that 300mm equipment spending in the memory sector would top $50 billion for the first time this year, citing AI-driven demand for high-bandwidth memory and other advanced DRAM.6 This is the factory side of the same AI buildout that is driving new data center and power investment, and more wafer starts mean more HF. Stella Chemifa was one of only two Japanese firms the journal identified in 2019 as able to supply ultra-high-purity semiconductor-grade HF.7 Its annual securities report shows semiconductor sales rising 5.8 percent to ¥22.2 billion in the year to March 2026, driven by AI-related shipments; the company also passed higher raw material costs through to customers.8 In China, STAR Market Daily reported, citing price data from the consultancy Baichuan Yingfu, that as of June 29 domestic prices for the UP and UPS electronic grades had climbed 19 and 17 percent since the start of the year, reaching 7,885 and 8,750 yuan per ton.9 The purest grade, designated G5 or UPSSS and used for sub-55nm processes on 12-inch wafers, is far harder to make, and a brokerage news service described its worldwide supply as relatively tight. Chinese producers are moving up the purity ladder as well. Do-Fluoride says its own G5 acid ships in volume to TSMC and Samsung, according to the same report.10

Japanese and South Korean companies lead that final purification step, but the fluorine they purify comes mostly from China and Mongolia.11 USGS puts world fluorspar mine output at about 10 million tons in 2025. China mined 6 million tons, or 60 percent, and Mongolia and Mexico about 1.5 million tons apiece. China also holds 110 million of the world’s estimated 330 million tons of reserves. Chinese domestic supply stayed tight in 2025 as government rectification of the mining sector continued and some mines stopped work for safety inspections, and imports climbed over the same period. China bought 856,000 tons of foreign fluorspar in the first half of 2025, up 48 percent, and Mongolia supplied 86 percent of it.12 That works out to roughly 736,000 tons of Mongolian ore in six months. At that rate, China’s imports from Mongolia would be close to Mongolia’s estimated annual mine output. The figures point to a close link between Mongolian mining and Chinese processing. Together, China and Mongolia mine about three quarters of the world’s fluorspar, and most of Mongolia’s output ends up in China. The United States has not mined fluorspar in meaningful quantities since 1995, and Mexico supplied 64 percent of its fluorspar imports between 2021 and 2024. The federal government keeps no fluorspar stockpile, although the mineral is on the 2025 U.S. critical minerals list.13

Fluorspar becomes useful to a fab only after it is reacted with sulfuric acid to make anhydrous hydrogen fluoride, the intermediate that purifiers in Japan and South Korea refine into electronic grades. Korea’s response to Japan’s 2019 export controls moved purification onshore but left this conversion step dependent on China. Japan’s trade ministry announced on July 1, 2019, that exports of hydrogen fluoride, fluorinated polyimide and photoresists to Korea would need individual licenses, effective July 4.14 Korea Customs data reported by ETNews showed that China accounted for 60 percent, by value, of Korea’s imports of semiconductor-use HF between July and October 2019.15 Seoul backed domestic purification in parallel, and by early 2020 the industry ministry was presenting Soulbrain’s enlarged high-purity HF plant as its first localization success.16 The upstream dependence never went away. In May 2026 TrendForce, citing The Elec, reported that Korea still had little anhydrous HF capacity and leaned heavily on Chinese material. Soulbrain, ENF Technology and Foosung began taking Chinese anhydrous HF that month at prices roughly 40 percent above where they stood at the start of the year.17 Japanese purifiers rely on Chinese capacity as well. Morita Chemical produces HF in China through a joint venture in Zhejiang in which the Chinese fluorochemical maker Zhejiang Sanmei holds 51 percent, a stake that a capital increase Sanmei disclosed in July would trim to 48.3 percent.18 Morita lists the venture’s annual capacity as 20,000 tons of anhydrous HF and 40,000 tons of electronic-grade acid.19 Stella Chemifa’s risk disclosures refer only to raw materials sourced from a specific region, but the management discussion in the same filing states that the company buys its anhydrous HF mainly from China.20

Fluorspar appears in the 2026 export license catalogue issued by China’s Ministry of Commerce (MOFCOM) and customs administration, as it did in the 2025 edition, so investor-press accounts describing a licensing regime introduced in 2026 overstate the change.21 HF itself is a controlled dual-use chemical. A 2023 MOFCOM notice piloting easier dual-use licensing in several free trade zones listed electronic-grade and other HF by customs code.22 On January 6, 2026, MOFCOM Announcement No. 1 prohibited exports of all dual-use items to Japanese military users and military end uses, and to any other end user or end use that would help raise Japan’s military capability. It also warned that organizations and individuals in any country who transferred Chinese-origin dual-use items to Japanese parties in breach of the ban would be held legally liable.23 Japan’s chief cabinet secretary, Minoru Kihara, said on January 7 that the scope of the ban was still unclear.24 On February 24, MOFCOM listed 40 Japanese entities, barring dual-use exports to 20 of them and requiring individual licenses, risk assessments and written end-use pledges for the other 20.25 The open-ended final category in the January ban gives Chinese licensing officials wide discretion over anhydrous HF bound for Japan, whether or not Beijing chooses to use it.

Sulfuric acid, the other main input to anhydrous HF, also became scarcer in 2026, for reasons unrelated to chips. After the war in the Middle East disrupted sulfur shipments, Beijing stopped sulfuric acid exports from May through the end of 2026 to protect domestic fertilizer supply, and June shipments fell to 980 tons.26 Even before the halt, the commodities consultancy CRU had recorded a 49 percent year-on-year fall in exports from January to April, to 666,808 tons, under a 700,000-ton quota.27 According to The Elec, as relayed by TrendForce, sulfuric acid has historically made up around 30 percent of the cost of producing anhydrous HF and may now represent more than half of it.28 Sulfur is a byproduct of oil and gas refining, and the same TrendForce report says shipping bottlenecks in the Strait of Hormuz have disrupted more than 30 percent of global sulfur supply.29 That ties the cost of a basic chip chemical to oil and gas markets.

Korea’s largest anhydrous HF plant, a 50,000-ton-per-year facility in Ulsan built by Toyo Engineering Korea for BGF Ecospecialty, a BGF group materials company, was completed in September and can cover about half of domestic demand.30 In 2024 Vietnam’s Nui Phao mine signed a memorandum of understanding with the plant’s owner, then called Fluorine Korea, to supply up to 70,000 tons a year of acid-grade fluorspar, with any offtake contract still to be negotiated.31 USGS reports that a Canadian mine idled in 2022 made its first acid-grade shipment at the end of August 2025 and is ramping toward 200,000 tons a year, and that a fluorspar mine in Utah was under construction.32 The United States also has sources of fluorine that do not depend on mining fluorspar. The Energy Department sells aqueous HF produced as a byproduct of converting depleted uranium hexafluoride at its Paducah and Portsmouth sites in Kentucky and Ohio. Three phosphoric acid plants recovered about 45,000 tons of fluorosilicic acid in 2025, equivalent to roughly 73,000 tons of fluorspar, and a company in Aurora, North Carolina, converts fluorosilicic acid into HF.33

For Washington and its partners, Korea’s experience argues for financing acid-grade fluorspar, anhydrous HF conversion and electronic-grade purification as a package, since backing purification alone leaves fabs exposed to the same Chinese risk. Long-term offtake agreements with suppliers in Mexico, Vietnam, and Canada would support investment in alternative sources of acid-grade fluorspar. A National Defense Stockpile holding could provide a buffer during a disruption. Fluorine recovered from phosphate processing is another domestic option worth serious consideration. USGS estimates that U.S. phosphate rock reserves contain about 72 million tons of fluorspar equivalent, enough on paper for nearly two centuries at the current U.S. consumption rate of roughly 370,000 tons a year.34 Very little of it is recovered today, about 45,000 tons of fluorosilicic acid in 2025, and converting more of it to anhydrous HF would take new plant capacity, the same step Korea only started to close this year.

Notes

  1. “AI Boom Fuels Scramble for Critical Chipmaking Chemical, Suppliers Hike Prices 20-30%,” Stock News, Tiger Brokers, July 2, 2026, accessed November 1, 2026, https://www.itiger.com/news/1183013009; Stella Chemifa Corporation, Yūka shōken hōkokusho [Annual securities report], 83rd fiscal year (April 1, 2025, to March 31, 2026), filed June 18, 2026, EDINET, accessed November 1, 2026, https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YDCE.pdf. ↩
  2. MicroChemicals GmbH, “Wet-Chemical Etching of Silicon and SiO2,” application note, n.d., accessed November 1, 2026, https://www.microchemicals.com/dokumente/application_notes/silicon_etching.pdf. ↩
  3. Vanessa Londono, “Fluorspar,” in Mineral Commodity Summaries 2026 (Reston, VA: U.S. Geological Survey, February 2026), accessed November 1, 2026, https://pubs.usgs.gov/periodicals/mcs2026/mcs2026-fluorspar.pdf. ↩
  4. Gas Review Co., “Electronics Market Stumped by Political Matters,” column, July 11, 2019, accessed November 1, 2026, https://gasmos.gasreview.co.jp/column/917. ↩
  5. SEMI, “Global 300mm Fab Equipment Spending to Reach $227 Billion in 2029 as Buildout Accelerates, SEMI Projects,” press release, October 13, 2026, accessed November 1, 2026, https://www.semi.org/en/semi-press-release/global-300mm-fab-equipment-spending-to-reach-227-billion-in-2029-as-buildout-accelerates-semi-projects. ↩
  6. SEMI, “SEMI Projects 300mm Memory Equipment Investment to Surpass $50 Billion in 2026,” press release, June 29, 2026, accessed November 1, 2026, https://www.semi.org/en/semi-press-release/semi-projects-300mm-memory-equipment-investment-to-surpass-50-billion-dollars-in-2026. ↩
  7. Gas Review, “Electronics Market Stumped.” ↩
  8. Stella Chemifa, Yūka shōken hōkokusho. ↩
  9. STAR Market Daily (Kechuangban Ribao), “巨头抢购电子级氢氟酸 部分供货商年内已涨价三成” [Chip giants scramble for electronic-grade hydrofluoric acid; some suppliers have raised prices 30 percent this year], relayed by Tonghuashun (10jqka.com.cn), July 1, 2026, accessed November 1, 2026, https://news.10jqka.com.cn/20260701/c677859896.shtml. ↩
  10. “AI Boom Fuels Scramble.” ↩
  11. “AI Boom Fuels Scramble.” ↩
  12. Londono, “Fluorspar.” ↩
  13. Londono, “Fluorspar”; U.S. Geological Survey, “About the 2025 List of Critical Minerals,” November 6, 2025, accessed November 1, 2026, https://www.usgs.gov/programs/mineral-resources-program/science/about-2025-list-critical-minerals; U.S. Department of the Interior, Geological Survey, “Final 2025 List of Critical Minerals,” Federal Register 90 (November 7, 2025): 50494, accessed November 2, 2026, https://www.federalregister.gov/documents/2025/11/07/2025-19813/final-2025-list-of-critical-minerals. ↩
  14. Republic of Korea, “Japan: Measures Related to the Exportation of Products and Technology to Korea: Request for Consultations by the Republic of Korea,” World Trade Organization, communication dated September 11, 2019, copy hosted by CISTEC, accessed November 1, 2026, https://www.cistec.or.jp/service/kankoku/190920-wto.pdf. ↩
  15. Kang Hae-ryeong, “‘日 막히자 中 떴다’...불화수소 수입 판도 급변” [With Japan blocked, China rises: Korea’s hydrogen fluoride imports shift sharply], Electronic Times (etnews), November 25, 2019, accessed November 1, 2026, https://www.etnews.com/20191125000174. ↩
  16. Moon Chaeseok, “Korea Achieves First Self-Reliance in ‘Hydrofluoric Acid,’ One of the Three Major Regulated Items by Korea and Japan,” Asia Business Daily, January 2, 2020, accessed November 1, 2026, https://www.asiae.co.kr/en/article/2020010110154663603. ↩
  17. TrendForce, “[News] Anhydrous Hydrogen Fluoride Supply Tightens, Raising Concerns Across Semiconductor Materials Chain,” TrendForce News, May 19, 2026, citing TheElec, accessed November 1, 2026, https://www.trendforce.com/news/?p=57765. ↩
  18. Zhejiang Sanmei Chemical Industry Co., “关于放弃联营企业增资优先认缴出资权暨关联交易的公告” [Announcement on waiving the preemptive right to subscribe to an associate’s capital increase and related-party transaction], announcement no. 2026-052, July 2026, accessed November 1, 2026, https://pdf.dfcfw.com/pdf/H2_AN202607151826989119_1.pdf. ↩
  19. Morita Chemical Industries Co., “Branches,” company website, accessed November 1, 2026, https://www.morita-kagaku.co.jp/en/company/base/. ↩
  20. Stella Chemifa, Yūka shōken hōkokusho. ↩
  21. Ministry of Commerce and General Administration of Customs of the People’s Republic of China, “公布《出口许可证管理货物目录（2026年）》” [Catalogue of goods subject to export license management (2026)], December 30, 2025, reproduced in Hong Kong Trade and Industry Department trade circular, accessed November 1, 2026, https://www.tid.gov.hk/en/tradecircular/files/2026/ci362026a.pdf; Ministry of Commerce and General Administration of Customs of the People’s Republic of China, Announcement No. 65 of 2024, “公布《出口许可证管理货物目录（2025年）》” [Catalogue of goods subject to export license management (2025)], December 31, 2024, reproduced in Hong Kong Trade and Industry Department trade circular, accessed November 1, 2026, https://www.tid.gov.hk/en/tradecircular/files/2025/ci202525a.pdf; John Zadeh, “How to Evaluate Acid-Grade Fluorspar Projects in Australia,” Discovery Alert, September 20, 2026, accessed November 1, 2026, https://discoveryalert.com/education/acid-grade-fluorspar-australia-projects/. ↩
  22. Ministry of Commerce of the People’s Republic of China, “商务部关于在部分自由贸易试验区开展两用物项出口管制相关试点工作的通知” [Notice on pilot dual-use export control measures in selected free trade zones], August 20, 2023, reproduced in Hong Kong Trade and Industry Department trade circular, accessed November 1, 2026, https://www.tid.gov.hk/en/tradecircular/files/2023/ci2023683a.pdf. ↩
  23. Ministry of Commerce of the People’s Republic of China, “商务部公告2026年第1号 关于加强两用物项对日本出口管制的公告” [Announcement No. 1 of 2026 on strengthening export controls on dual-use items to Japan], January 6, 2026, accessed November 1, 2026, https://www.mofcom.gov.cn/zwgk/zcfb/art/2026/art_8990fedae8fa462eb02cc9bae5034e91.html. ↩
  24. Sankei Shimbun, “木原稔官房長官「極めて遺憾」 中国の輸出管理強化、レアアース含むかは「不明瞭」” [Chief Cabinet Secretary Kihara calls China’s tighter export controls “extremely regrettable”; unclear whether rare earths are covered], January 7, 2026, accessed November 1, 2026, https://www.sankei.com/article/20260107-CAKF5ST5XJNHTLWG76CC3AA7E4/. ↩
  25. Xie Xiyao and He Xiao, “我国将20家日本实体列入出口管制管控名单” [China places 20 Japanese entities on export control list], Xinhua, February 24, 2026, accessed November 1, 2026, https://www.news.cn/20260224/c13e842160df4514bd183ae052957684/c.html. ↩
  26. Reuters, “China’s Sulphuric Acid Exports All but Vanish in June, Plunging 99%,” Mining Weekly, July 20, 2026, accessed November 1, 2026, https://www.miningweekly.com/article/chinas-sulphuric-acid-exports-all-but-vanish-in-june-plunging-99-2026-07-20; Natalie Noor-Drugan, “China’s Sulphuric Acid Export Halt Tightens Global Supply,” BC Insight (CRU Group), May 27, 2026, accessed November 1, 2026, https://www.bcinsight.crugroup.com/2026/05/27/chinas-sulphuric-acid-export-halt-tightens-global-supply/. ↩
  27. Noor-Drugan, “Sulphuric Acid Export Halt.” ↩
  28. TrendForce, “Anhydrous Hydrogen Fluoride Supply Tightens.” ↩
  29. TrendForce, “Anhydrous Hydrogen Fluoride Supply Tightens.” ↩
  30. Toyo Engineering Korea, “Toyo-Korea Awarded Contract for Anhydrous Hydrogen Fluoride Production Facility in Ulsan, South Korea,” news release, March 31, 2025, accessed November 1, 2026, https://www.toyo-eng.com/kr/en/company/news/?n=5446; Kang Ye-seul, “BGF, KNW 자회사 편입...유통·플라스틱·반도체 ‘3축’ 지배 구조 개편” [BGF makes KNW a direct subsidiary in group restructuring], Economist (Korea), October 7, 2026, accessed November 1, 2026, https://economist.co.kr/article/view/ecn202610070073. ↩
  31. Masan High-Tech Materials, “Nui Phao Mining Signs MOU to Supply Acidgrade Fluorspar to South Korean Partner,” July 30, 2024, accessed November 1, 2026, https://masanhightechmaterials.com/nui-phao-mining-signs-mou-to-supply-acidgrade-fluorspar-to-south-korean-partner/; BGFecospecialty, “History,” company website, accessed November 1, 2026, https://www.bgfecospecialty.com/en/history.php. ↩
  32. Londono, “Fluorspar.” ↩
  33. Londono, “Fluorspar.” ↩
  34. Londono, “Fluorspar.” ↩

Bibliography

Share this post
Written by
Maxwell Brown
Maxwell Brown
Maxwell Brown is an Assistant Professor of Mineral and Energy Economics at Colorado School of Mines. He teaches mathematical and computational economics and develops large-scale models of mineral, energy, and economic systems.
Morgan Bazilian
Morgan Bazilian
Morgan D. Bazilian is Director of the Payne Institute and professor at Colorado School of Mines. Former World Bank energy specialist and UN diplomat, he is a leading expert on energy security and policy, with 220+ publications and affiliations.

Be the first to know

Join our community and get notified about upcoming stories

Subscribing...
You've been subscribed!
Something went wrong