TOKYO: Japan is worried that the US plan to pump billions of dollars into chip manufacturing to stop China could wipe out what remains of a Japanese semiconductor industry that once dominated the world.
According to Japan’s industry ministry, after “three lost decades”, the country’s share of global chip manufacturing has fallen from half to a tenth as it moved customers to cheaper rivals and failed to maintain an edge in cutting-edge production. doing.
As China and the United States, fueled by a trade war and security concerns, increase support for manufacturing chips that run everything from smartphones to missiles, officials worry that Japan will be squeezed outright.
Former Prime Minister Shinzo Abe told fellow members of the ruling LDP party in May at the first party meeting to discuss how the country might be, saying, “We cannot continue what we are doing, we must Something has to be done on a different level in some way.” A leading digital economy.
Depicting Japan’s fears of being left out of a new technology world order, documents distributed by the Ministry of Economy, Trade and Industry earlier this year showed a thick red dotted line on a bar graph that aims to reach zero-chip by 2030. Points to the potential for industry share.
A major concern is the future of the country’s still world-leading firms that supply items such as silicon wafers, chemical films and production machinery to chip makers.
Officials fear that by luring Asian chip foundry giants such as Taiwan’s Semiconductor Manufacturing Company Limited (TSMC) to its soil, the United States may be tempted to follow these firms.
“It is possible for companies to manufacture and export to Japan, but the closer you are to a supplier, the easier it is to exchange information,” said Kazumi Nishikawa, director of IT industry at METI.
Although change may not come immediately, “it could happen in the long term,” he said.
The companies Nishikawa is concerned about include wafer maker Shin-Etsu Chemical and Sumco Corp photoresist supplier JSR Corp and production machinery builders Screen Holdings and Tokyo Electron.
“We are always ready to respond to policy changes in each country,” a JSR spokesperson said.
When asked by Reuters, neither company said they currently plan to move production to the United States.
tech war
To sustain them, Japan needs chip foundries that will buy their wafers, machinery and chemicals, and also ensure a steady supply of semiconductors for the country’s car companies and electronic equipment makers.
TSMC, which is looking to expand overseas amid concerns about the potential vulnerability of its Taiwan operations to mainland China’s regional ambitions, has set up a research and development center near Tokyo. It is also reviewing plans to build a fabrication plant in Japan.
However, its largest overseas venture to date is the $12 billion plant it is building in Arizona, United States.
To stay abreast of the technology race, Prime Minister Yoshihide Suga’s government in June approved a strategy devised by Nishikawa’s team at METI to ensure that Japan had enough chips to compete in technologies. that will drive future economic growth, including artificial intelligence. Speed 5G connectivity and self driving vehicle.
One initiative is to turn Japan into an Asian data center hub. Such hubs generate a huge demand for semiconductors, which in turn will attract chip makers to build plants nearby.
expense support
However, the success of its industrial policy would depend on money.
So far, the country has allocated 500 billion yen ($4.5 billion) to bolster the technology supply chain to help companies reeling from shortages of chips and other components during the coronavirus pandemic and to promote transition to 5G.
This is only a fraction of the spending proposed by other countries.
“At the current level of support, it is difficult for Japan’s semiconductor industry, and we want government incentives that are comparable elsewhere in the world,” the Japan Electronics and Information Technology Industries Association (JEITA) said in an email.
The US Senate approved a bill authorizing $190 billion of public funding for new technology, including $54 billion on chips, while the European Union spent 135 billion euros ($159 billion) on nurturing its digital economy. ) is planned to be spent.
To match this spending, Japan would have to set aside large amounts of public money that the gray nation could spend on health and welfare. METI has yet to say how much it believes it needs it.
“Given the financial condition of Japan” the United States, the European Union and China, former Economic Revitalization Minister Akira Amari and the leader of the LDP group looking to “make Japan number one again” will be hard to find.
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