Founding Shin-Etsu Handotai with Dow Corning — and buying it out under a first-refusal right (1979)

Start by sharing, finish by taking it back

When Dow Corning said in 1979 that it wanted out, Shin-Etsu held a right of first refusal. The joint venture had been merely a form for starting the business; how it would end was already written into the contract. For president Odagiri Shintaro this was the second exercise of such a clause, after Shintech in 1976. Begin a business shared with another company, then take the whole of it the moment the partner leaves. That the same design worked in semiconductor silicon as in PVC is where this company’s handling of capital shows itself.

Taking it back, however, guaranteed nothing. It was five years to the integrated Shirakawa plant and nearly twenty to volume investment in 300mm wafers, and the weight of the capacity funded in between was arguably unbearable except under sole ownership. A right of first refusal is also a passive right: it cannot be used until the other side says it is leaving. The quality of a decision to enter a joint venture is settled less by the terms at the moment of joining than by whether the terms of dissolution were written down first.