Kuo Chiao: Transforming and Adjusting Operations Strategy to Link with AWI Industrial Gases and Enter the Semiconductor Supply Chain

Amid challenges posed by high oil prices and the reshaping of global trade flows, Kuo Chiao (1312-TW) President Tseng Chia-Hsiung stated today (24th) that the company is actively adjusting its operational strategy. Transformational investment and advancing product high-value addition have been set as current priorities. Beyond continuously optimizing its core business, Kuo Chiao is also proactively expanding into high-tech and semiconductor material-related industries. Notably, its strategic collaboration this year with Aitoh Works Inc. (AWI), a major Japanese industrial gas manufacturer, will serve as a pivotal step in linking Kuo Chiao to the semiconductor materials supply chain.

Tseng pointed out that ongoing U.S.-Iran tensions and prolonged disruptions in crude oil supply are driving high oil prices, which suppress demand and contribute to inflation and interest rate hikes worldwide—further dampening consumer spending and corporate investment momentum. Additionally, China’s persistent overcapacity continues to spill over globally, accelerating industry consolidation and capacity exits. Regional supply-demand structures are expected to gradually improve. Currently, peer petrochemical companies are also flexibly adjusting production line utilization rates based on market demand and margin changes to moderately absorb domestic supply gaps.

Tseng highlighted that last month (August), Kuo Chiao announced a partnership with AWI to expand into Taiwan’s semiconductor materials market, jointly investing in Hongguang New Technology, a specialty gas manufacturer. This move capitalizes on AWI’s long-standing presence in Japan’s industrial gas market, its diverse product and service offerings, and its continuous expansion into overseas and electronics-related businesses, including international markets such as Taiwan.

Regarding the collaboration, Tseng emphasized that its value extends beyond a single investment. By combining Kuo Chiao’s deep-rooted industrial foundation cultivated in Taiwan over many years with AWI’s expertise in industrial gases, product technologies, and international markets, Kuo Chiao will become a key local partner for AWI in Taiwan. Through complementary strengths, both parties expect positive outcomes for future business expansion in Taiwan, serving as a crucial driver to deepen their footprint in the semiconductor materials market.

Kuo Chiao has long invested in high-value-added materials, with products including bio-based styrene, low-carbon footprint hydrogen, long-chain and bio-based nylon, and nylon elastomers. Its subsidiary, Quanzhou Guo Heng, continues to develop high-melting fibers and polypropylene products used in the electronics and automotive sectors. This deepened cooperation with AWI builds upon Kuo Chiao’s existing high-value material initiatives, further extending international collaboration into the semiconductor specialty materials supply chain and continuously expanding cross-industry transformation opportunities.

Kuo Chiao reported consolidated revenue of NT$12.914 billion in the first half of this year, representing a 17% year-on-year increase. Gross margins turned positive in Q2. The company believes that despite the petrochemical industry still facing challenges such as high oil prices, suppressed demand, and oversupply, its core operations have shown improvement. Going forward, it will continue strengthening its product mix and operational efficiency while simultaneously advancing high-value product development and strategic investment positioning.

Tseng stated that the industrial environment is changing, and future competitiveness can no longer rely solely on traditional petrochemical scale. Instead, existing processes, materials, and industrial experience must be transformed into new value. Moving forward, Kuo Chiao will expand into high-tech applications through international collaboration and strategic investments. On the product side, it will deepen its focus on specialty materials, electronic chemicals, and low-carbon hydrogen collaborations with major domestic gas producers. It will also continuously evaluate cross-domain partnerships and global market development opportunities to increase the proportion of high-value transformation and enhance long-term operational resilience.