A fund backed by the Japanese government on Monday proposed a $6.3 billion acquisition of semiconductor material giant JSR, underscoring the strategic emphasis governments around the world are putting on the critical technology of chips.

The Japanese Investment Corporation proposed an offer of 4,350 Japanese yen ($30.3) per share to buy JSR, marking a 35% premium to Friday’s closing price.

JSR shares rallied more than 20% on Monday on hopes of the deal. JIC could put in a tender offer in December, the company said.

JSR is a major company in the semiconductor supply chain in an area known as photoresists, where Japan is one of the world leaders. Photoresists are light-sensitive materials needed as part of the process to etch patterns into wafers. These eventually are the design of the circuit of a chip.

“Japan wants to double down on its comparative advantage in materials … needed for semiconductor manufacturing,” Pranay Kotasthane, chairperson of the high tech geopolitics program at the Takshashila Institution, told CNBC.

The potential acquisition comes at a time when semiconductors are front and center of a broader technology battle between the U.S. and China.

Last year, the U.S. announced sweeping export restrictions on semiconductor tools and certain chips to China. Countries such as the Netherlands, home to a critical chip firm called ASML, as well as Japan, followed suit with similar restrictions.

At the same time, countries are trying to secure their own supply chains and build up their domestic chip industries, focusing on areas where they are traditionally strong.

For Japan, that is with companies such as JSR in chemicals and materials.

“JIC’s investment in JSR means that the government might have a higher say over its decisions,” Kotasthane said. “Geopolitically, this would make China uncomfortable. Especially since Japan has gone along with its own version of export controls against the Chinese semiconductor industry.”