In recent years, as the global trade gradually grew more volatile due to conflicts, tariffs and pandemic-related disruptions, .
The country once dominated the market of high-performance electronics and still boasts some of the most cutting-edge chip fabrication technology in the world. In the 1980s, however, effectively allowed nations like as the sector was not very profitable at the time. It was also understood that , allowing Japan to rely on imports.
That understanding has, however, changed, said Kazuto Suzuki, a professor of science and technology policy at Tokyo University. Talking to DW, he pointed to the disruption of supply chains triggered by .
“The sudden shortage of chips in Japan, Europe and the US made the Japanese government realize that if domestic industry was not to go into decline, then we would need our own dedicated supplies,” he said.
More recently, the Japanese government’s sense of urgency has been heightened by , Suzuki added.
Japan not aiming for the top?
“The biggest single factor for the government is ensuring economic security,” said Damian Thong, head of Japan equity research and a semiconductor sector specialist at the Macquarie Group in Tokyo.
“The feeling is that it is critical that Japan is able to maintain an independent capability in semiconductors in order to meet the needs of its own manufacturers,” he told DW.
has further focused the government’s attention on the sector, Thong added. Despite these pressures, however, Thong believes it is unlikely that Japan is attempting to regain its former position as the world’s dominant chipmaker.
“The government here is not trying to deploy on a global scale,” Thong told DW. “It wants to maintain its own scale for Japan but, at the same time, remain relevant and attractive to other foreign companies to come here and set up their own fabrication facilities in the future.”
Taiwan’s semiconductor giant teams up with Sony, Denso
With those goals in mind, Japan has been pursuing a two-pronged strategy to boost domestic production. Firstly, it invited in 2021 to link up with Sony and auto components manufacturer Denso and build a plant in Kumamoto, southern Japan. The project is worth 1.2 trillion yen ($8.01 billion, €7.34 billion) with over 40% financed by government subsidies.
The plant is producing the 22-nanometer and 28-nanometer chips that are used in cars and consumer electronics. In 2023, TSMC announced that it would be building a second fabrication plant in the area due to growing demand.
The second element of the strategy was to create a new Japanese semiconductor manufacturer Rapidus. Since 2022, Japanese government agencies have been funneling hundreds of millions of dollars into the new company to help it set up production facilities in Hokkaido.
Rapidus is working with the US firm IBM and the Belgian Interuniversity Microelectronics Center (IMEC) organization to put cutting-edge semiconductor research into production. The government has recently announced that an additional 100 billion yen is being made available to Rapidus under the 2025 budget.
“The objective is to build state-of-the-art chips with other companies to ensure that Japan remains a global player,” said Suzuki.
“There is rapidly growing competition in the semiconductor sector, particularly due to the huge demand in the areas of artificial intelligence, electric vehicles, automated driving, drones and others,” he said.
‘Last chance to revitalize’
While , Japanese companies still excel in producing machinery required to make sophisticated chips. This technology, however, could at some point be acquired by China. Also, , which it views as a breakaway province, is also fueling concerns of supply disruptions.
Suzuki says Japan has no option but to “step up” to the challenge because the competition “is only going to get tougher.” He also believes that the government is on the right track to ensuring self-sufficiency in chip production.
“Our advantages are that we have the materials required and the equipment necessary to build better semiconductors,” according to the Tokyo-based professor.
“The government sees this as the last chance to revitalize the domestic industry, while we still have the engineers and scientists with the required knowledge,” Suzuki said.
Edited by: Darko Janjevic
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