Company history

The company begins in 1908 at Okitsu in Chiba, where Mori Nobuteru founded Sobo Suisan to make iodine and potassium nitrate from kajime kelp gathered off the local shore. A merger with Tokyo Denki in 1919 and the subsequent separation left the iodine business standing alone as Nihon Yodo, and from there Mori pushed into one electrochemical field after another. His premise was simple and unusual for the time: water was the one resource Japan had in abundance, so turn it into electricity, then into raw material, and use it to make at home what the country was importing. On that logic he ran two separate companies in parallel — Nihon Yodo (1926) and Showa Fertilizer (1928) — the first of which, spanning industrial chemicals, carbide, abrasives, ferroalloys and aluminium, was renamed Nippon Electrical Industries in March 1934 to match what it had actually become.

Both halves delivered a national first. In April 1931 Showa Fertilizer’s Kawasaki works produced ammonium sulfate by a wholly domestic process, and in January 1934 Nippon Electrical Industries’ Omachi plant achieved Japan’s first industrial aluminium smelting. Two firms with different shareholders but one operating philosophy had substituted domestic production for the two most conspicuous imports of the day; the merger that followed in June 1939 — creating Showa Denko — only formalised what already existed. The new company kept expanding on aluminium through the war, absorbing Nichiman Aluminium in 1943, until bombing destroyed the Kawasaki works and defeat brought an outright ban on aluminium production.

Reconstruction began the day after the surrender. Ammonium sulfate shipments resumed by the end of 1945, plants at Shiojiri, Chichibu, Toyama and Asahikawa were converted to calcium cyanamide to meet the food crisis, and the company listed on the Tokyo Stock Exchange in May 1949. Aluminium restarted at Omachi in 1951; the same year Showa Denko opened a central research laboratory and put quality control at the centre of management, winning the first Deming Prize. Against that, 1948 brought the Showa Denko scandal, in which president Hinohara Setsuzo was arrested over loans and political money — a reminder that the same postwar years that built the company’s research base also exposed how close its management sat to politics.

In 1956 Showa Denko licensed polyethylene technology from Phillips Petroleum of the United States, set up the subsidiary Showa Yuka in 1957 and began producing high-density polyethylene in 1959; the absorption of Showa Gosei Kagaku Kogyo added acetic-acid derivatives. For a company built on hydroelectric power and its own process development, buying a foreign licence to enter petrochemicals was a break in kind, not merely in scale — the base of the business was moving from water to oil.

The 1960s were fought on two fronts. Aluminium production started at Chiba in November 1962, while the Oita petrochemical complex, an integrated site running from ethylene through polyethylene and utilities, came on stream in April 1969. The electrochemical pioneer and the petrochemical newcomer ran side by side for a decade, with the two coasts of the country carrying one face each.

The 1973 oil crisis forced a choice between them. Showa Denko dropped the planned aluminium expansion at Chiba and concentrated on the second ethylene phase at Oita; in January 1974 it dissolved the joint venture with Phillips and consolidated petrochemicals by merging Showa Yuka with Tsurusaki Yuka, then absorbed Showa Yuka into the parent in 1979. Petrochemicals were now the main business in name as well as fact. The decade also settled an older account: in the Niigata Minamata disease litigation filed in 1967 the company chose not to appeal the first-instance judgment and concluded a compensation agreement in 1973.

The second oil crisis and the strong yen finished what the first had started. Electricity prices stripped domestic aluminium smelting of any international competitiveness; the business was carved out into Showa Keikinzoku in 1976, wound down site by site, and in November 1986 the subsidiary was dissolved and folded back into the parent as domestic smelting stopped altogether. The company that had industrialised aluminium in Japan in 1934 closed the business fifty-two years later, and with it the strongest claim behind the phrase electrochemical pioneer.

What replaced it was assembled piece by piece: fine chemicals, titanium, electronics materials and aluminium forging at home, and abroad the 1988 purchase of the Airco Carbon graphite-electrode business from The BOC Group — a small deal at the time that would turn out to be the template for a far larger one thirty years later. In October 1990 a second ethylene cracker took Oita to 730,000 tonnes a year, then the largest single-site petrochemical complex in Japan.

To get out from under a structure that depended on a petrochemical complex, Showa Denko began rebuilding its portfolio by acquisition rather than by development. In January 2003 it bought the hard-disk media business of the Mitsubishi Chemical group — a field it had no history in — and added Fujitsu’s hard-disk business in July 2009, consolidating an already concentrated industry. Iodine, aluminium, fertiliser and petrochemicals now had electronic components laid over them.

The purchases did not yet fix the earnings. In the year to December 2009 the company reported sales of $7.3B (¥678bn) with an operating loss of $53.5M (¥5bn) and a net loss of $406.3M (¥38bn) — its first full-year operating loss after decades in the black — and in June 2010 the presidency passed from Takahashi Kyohei to Ichikawa Hideo. Acquisitions alone had not lifted the structural profitability of a diversified chemical company.

Under Morikawa Kohei, president from June 2016, the company stopped spreading and concentrated. In October 2017 it acquired Germany’s SGL GE Holding, which together with the North American plants bought in 1988 gave it a world-leading share of graphite electrodes — a business the industry had written off. China’s ban on induction-furnace steel then sent electrode prices soaring, and the year to December 2018 produced record results: operating profit of $1.6B (¥180bn) and net profit of $1.0B (¥112bn). The cash from a commodity cycle was already earmarked for something else.

In April 2020 Showa Denko spent about $9.0B (¥960bn) to buy Hitachi Chemical, a company with world-leading positions in semiconductor back-end materials such as packaging encapsulants and copper-clad laminates. The borrowing exceeded the graphite-electrode windfall that had made the deal thinkable, and the year to December 2020 closed with sales of $9.1B (¥974bn), an operating loss of $181.7M (¥19bn) and a net loss of $714.6M (¥76bn) as the pandemic met the cost of the acquisition. It was a deliberate trade of near-term results for a different long-term shape.

Takahashi Hidehito succeeded Morikawa in June 2021 and completed the transition. In January 2023 the group moved to a holding-company structure and changed its name from Showa Denko to Resonac Holdings, with Showa Denko Materials — the former Hitachi Chemical — renamed Resonac and taking over the operating businesses. Discarding a corporate name carried since 1939 was the point: it made the shift to semiconductor and electronic materials irreversible in a way an internal reorganisation could not. Whether it was the completion of that shift or only the start of a longer restructuring is still open — the acquisition widened the conglomerate rather than narrowing it, and the portfolio churn, including the carve-out of petrochemicals, has continued since.