Japan, once a semiconductor manufacturing powerhouse, has in recent years been working to revitalize its semiconductor industry in order to boost its competitiveness against countries like Taiwan and South Korea.
The Japanese government is dangling subsidies to lure foreign chipmakers such as Taiwan Semiconductor Manufacturing Co. (TSMC) to Japan in an effort to upgrade the country’s semiconductor manufacturing sector, and is also offering a massive 920 billion yen ($6.2 billion) boost to Rapidus, a chipmaker set to open in 2022 that aims to produce advanced semiconductors domestically.
The Japanese government also said on Friday it would expand the list of “core business areas” to apply foreign trade controls to companies that make semiconductor manufacturing equipment and advanced electronic components, in a move seen as a move to bolster the security of Japan’s semiconductor supply chain.
Foreign investors are required to submit prior notification when making a direct investment that acquires 1% or more of the voting rights of a listed company, or when acquiring shares in an unlisted company.
The list of core business sectors is maintained by the Ministry of Finance. It includes sectors deemed to be of high national security interest, and aims to ensure stable supply chains and prevent technology leaks and the diversion of civilian technology to military use. Sectors added to the list on Friday include manufacturers of machine tool parts such as ball screws and manufacturers of marine engines.
Japan’s Semiconductor Industry
Japan may not currently have a company dominating global semiconductor manufacturing like Taiwan’s TSMC or South Korea’s Samsung, but it has a long history in the semiconductor sector.
In the 1980s, six of the top 10 chip manufacturers were Japanese, and by 1988 Japan accounted for roughly half the market. But a combination of changing market trends, new competition and geopolitical pressures eventually caused Japan to lose its market dominance.
Nevertheless, Japanese companies still play a major role in supplying the materials and equipment to make semiconductors, and Japan remains a key player in the global semiconductor ecosystem.
Companies such as Shin-Etsu Chemical and Tokyo Ohka Kogyo Co., Ltd. may not be well known to many, but these companies are major suppliers of semiconductor manufacturing materials. Japanese material suppliers are estimated to hold about 48% of the market share.
Companies such as Tokyo Electron, Lasertec and Nikon also provide machines and tools that chipmakers use in the chip-making process.
TSMC founder Morris Chang predicted that the company’s new facility in Japan will bring about a “semiconductor renaissance” in the country.
The Biden administration has reportedly pressured the Japanese government to tighten export controls on semiconductor manufacturing equipment to China, with Washington acknowledging the influence Japanese companies have over the industry.
