The harsh reality
According to Japan’s Ministry of Industry, after “3 lost decades”, Japan’s chip manufacturing market share has fallen from half to one-tenth. Their customers fall into the hands of cheaper competitors. In addition, the loss of leadership in advanced manufacturing continues to depress the industry.
Not stopping there, what is left of Japan is also at stake. China and the US, the world’s two largest economies, are at odds with each other in everything from security to science, technology and economics. The chip industry is one of them.
When the trade war between the US and China flared up, it became the beginning of a series of other conflicts, especially in the technology sector. Not only putting many Chinese tech giants under sanctions, the US also finds ways to prevent Chinese semiconductor companies from accessing the most advanced chip manufacturing technology.
However, Beijing does not sit idly by. The world’s second largest economy also poured a lot of money for self-reliance in the chip sector. In response, the US also invested heavily in this sector to maintain control over the key industry.
Along with that, Japan soon realized the influence of the US-China race on its semiconductor industry.
“We cannot continue what we are doing. We have to do something on a completely different level,” former Japanese Prime Minister Shinzo Abe told members of the ruling LDP party in May. the party’s first meeting on the issue of bringing Japan to the forefront of the digital economy.
In a document released by Japan’s Ministry of Economy, Trade and Industry (METI), Japan’s fear of being left behind in the new technology world order is described by holding a 0% market share. chips globally by 2030. Along with that is concern for the future of the country’s top semiconductor companies, which supply items such as silicon wafers, chemical films and specialized machinery for the chip industry.
“Changes may not come immediately but it could happen in the distant future,” said Kazumi Nishikawa, IT department manager at METI.
Currently, none of the major players in the Japanese semiconductor industry have announced their intention to move to the US, although the world’s largest economy is offering many incentives. However, Japan also determines what must be done to keep these businesses at home.
The world’s third largest economy needs chip foundries to buy materials from domestic manufacturers while ensuring a stable supply of chips for the country’s electronics and automotive manufacturers. .
Concerned about China’s moves towards the island of Taiwan, TSMC, the world’s largest chipmaker, has set up a research and development center near Tokyo. The company is also considering building a chip factory in Japan. However, TSMC’s biggest venture at the moment is the $12 billion factory the company is building in Arizona, USA.
In an effort to keep up with the technology race, Prime Minister Yoshihide Suga’s government has approved the creation of a strategic group to ensure Japanese chips are competitive in technologies seen as key to growth. future economic growth, including artificial intelligence, 5G, and self-driving cars.
One of the initiatives launched is to turn Japan into an Asian data center. Such hubs create huge demand for chips, causing manufacturing plants to be pulled to build nearby.
Money pumping war
However, the success of these policies depends heavily on money. To date, Japan has allocated $4.5 billion to strengthen technology supply chains to help companies facing shortages of chips and other components during the Covid-19 pandemic. 19 raging. At the same time, Japan is also promoting the transition to 5G.
Even so, Japan’s money was only a fraction of the spending plans that other countries proposed for this war. The Japan Electronics and Information Technology Industry Association said: “With the current level of support, it is difficult for Japan’s semiconductor industry and we would like the Government to offer comparable incentives comparable to other countries.
The US Senate has passed a $190 billion bill to support new technology, including $54 billion for chips. The European Union also plans to spend $159 billion to nurture its own digital economy.
However, to balance this level of spending, Japan will have to set aside a large amount of the money it intends to spend on health and social welfare.
“Given Japan’s financial situation, it will be difficult to compare with the US, EU and China,” said former Economic Recovery Minister Akira Amari. Mr. Amari is also currently the leader of the group “Put Japan back to No. 1” of the ruling LDP party.