Revive Industry through Cooperation with Foreign Companies

Editorial

13:24 JST, May 26, 2023

From the perspective of economic security, an increasing number of foreign companies are investing in semiconductor-related projects in Japan. It is vital to link this trend to the revival of the nation’s semiconductor industry.

Prime Minister Fumio Kishida invited to Japan the executives of six semiconductor companies from the United States, South Korea and Taiwan, as well as an executive from a European research body, and asked them to actively invest in the country and closely cooperate with Japanese firms. Discussions involving the executives of global semiconductor organizations gathered in one location are rare.

This can be said to indicate a growing interest in Japan’s semiconductor-related sector.

Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of semiconductor chips, has already started building a plant in Kumamoto Prefecture. The plant will produce advanced logic semiconductors for calculation, which are included in smartphones and other devices. TSMC mentioned the possibility of additional investment in recent discussions.

Micron Technology Inc. of the United States has announced it will invest up to ¥500 billion in Japan. The company intends to work on the development and mass production of next-generation storage memory at its plant in Hiroshima Prefecture.

Rapidus Corp., a new Japanese company launched at the initiative of the government with investments from firms including Toyota Motor Corp. and NTT Corp., aims to manufacture cutting-edge semiconductors with fine circuit line widths. Executives of IBM Corp. and some of the other organizations who visited Japan this time have promised to expand their cooperation with Rapidus.

South Korea’s Samsung Electronics Co. also intends to consider opening a research and development base in Japan.

One of the reasons foreign companies are interested in investing in Japan is probably that many Japanese companies have advanced technologies related to semiconductor manufacturing equipment, parts and materials.

Tokyo Electron Ltd. has a high market share globally in semiconductor manufacturing equipment, while SUMCO Corp., one of the major silicon wafer manufacturers, and other firms are strong in the semiconductor parts and materials field globally. It is essential to take advantage of these strengths and enhance cooperation with leading foreign companies.

There is a growing need to strengthen supply chains for critical materials, mainly due to the technological struggle for hegemony between the United States and China.

Semiconductors in particular are indispensable for industrial products, including those for military purposes. However, semiconductor production capacity is concentrated mainly in Taiwan and South Korea, with Taiwan accounting for the majority of advanced semiconductor production alone. Many companies have production bases in China.

There is a possibility that companies have begun seeking to diversify their supply chains in response to heightened geopolitical risks. Countries and regions on friendly terms with each other need to cooperate in creating a stable procurement system.

Japan-made semiconductors once boasted a 50% share of the global market, but Japanese firms lost out to foreign rivals and now the country lacks bases that are capable of manufacturing advanced chips.

The government has set aside a budget of ¥2 trillion to support the domestic semiconductor industry. In addition to rebuilding the foundation of the industry with the help of foreign capital, the government must also focus on the development of semiconductor-related human resources.

(From The Yomiuri Shimbun, May 26, 2023)