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Japan to Kickstart Semiconductor Comeback with Massive Subsidies

Given the vital role of semiconductor technology and the escalating geopolitical tensions involving Taiwan, local production has never been more critical.



Japan is experiencing a growing movement to strengthen its domestic semiconductor production. Due to its extensive utilization in various electronic devices, semiconductors were once called the "rice of industry" in Japan. 

The significance of bolstering local production has escalated amid trade tensions between the United States and China, as well as concerns over economic security. The Japanese government is even providing subsidies for domestic chipmaking. Now, a crucial question arises: Can Japan's semiconductor industry, which was once a dominant force and global market leader, stage a comeback?

Kickstarting Japan's Comeback

Aiming to achieve domestic production of next-generation semiconductors, Rapidus Corporation was established in 2022 with investments from eight Japanese companies. The company plans to commence mass production of cutting-edge logic semiconductors with a circuit linewidth of two nanometers by 2027. Capital investments and other initiatives amounting to ¥5 trillion JPY ($35.6 billion USD) have been allocated for the next decade, including the construction of a factory in Chitose, Hokkaido, scheduled.

The government has already announced a support package of ¥330 billion JPY ($2.4 billion USD) for Rapidus Corporation. The Minister of Economy, Trade and Industry Yasutoshi Nishimura has also expressed intentions to provide necessary support in the future as well.

Hokkaido Governor Naomichi Suzuki (right) inspects the industrial park where Rapidus plans to construct a factory in Chitose, Hokkaido in March. (© Kyodo)

Additionally, Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's leading contract manufacturers, is venturing into the Japanese market. They are in the process of constructing a factory in Kikuyo, Kumamoto Prefecture, with plans to begin production of logic semiconductors by 2024. The government has committed to providing up to ¥476 billion JPY ($3.4 billion USD) in support for this endeavor.

Meanwhile, major semiconductor company Renesas Electronics Corporation will resume production at its Kofu plant in Yamanashi Prefecture in 2024. In addition, KIOXIA Holdings Corporation, which specializes in flash memory, built a new facility at its factory in Yokkaichi, Mie Prefecture in October 2022.

Supply Chain Security Concerns

Japanese companies once held a dominant position in the global semiconductor market, capturing over 50% market share in the late 1980s. But their current share has dwindled to around 10%. Although certain segments maintain competitiveness, such as power semiconductors for power control, Japan now heavily relies on imports, primarily from Taiwan.

However, the escalating trade frictions between the US and China, coupled with concerns about a potential Taiwan contingency, pose risks of disruptions in semiconductor supply. Consequently, securing domestic production facilities has become critical for Japan. And the government is fully committed to providing comprehensive support for this pursuit.

Simultaneously, the competition to attract skilled professionals involved in advanced semiconductor production has intensified worldwide. As talent acquisition becomes a major challenge,  Japan is making efforts to address this issue through collaboration between industry, academia, and government. 

Chairman Tetsuro Higashi of Rapidus, a new company aiming for domestic production of next-generation semiconductors, Tokyo, April 27. (© Sankei by Hideo Iida)

In conjunction with Rapidus Corporation's factory construction, the Hokkaido Bureau of Economy, Trade and Industry plans to establish a dedicated council in June. This council, composed of local universities, the business community, and other stakeholders, aims to discuss strategies for talent acquisition and industry revitalization.

Japan's position in the global semiconductor industry has faced criticism for being "outdated" at times. Rapidus Chairman Tetsuro Higashi expressed his determination, stating, "We are actively working to make a significant comeback and overcome Japan's current setback. We believe this is our last chance to reclaim our position."



(Read the article in Japanese.)

Author: Nobuhiro Imanaka

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