At the Japan-U.S. summit held in Washington, D.C. on April 16, Japan and the U.S. agreed to “partner on sensitive supply chains, including on semi-conductors”. Japan’s semiconductor industry, once the world’s best, fell behind South Korea and Taiwan after the year 2000. With Japan and the U.S. combining their respective strengths and sharing responsibilities, Japan could reinstate its competitiveness, signaling a comeback for the Japanese semiconductor industry.
Japan’s semiconductor industry still maintains a high status in certain areas. The Sony Group holds about half of the global market share for CMOS (complementary metal oxide semiconductor) image sensors. Japan also has advanced technologies in power semiconductors used for power control and optical semiconductors such as light-emitting diodes (LEDs).
In the area of materials, Shin-Etsu Chemical and SUMCO hold nearly 60% of the market share for silicon wafers, which are essential for manufacturing semiconductors. JSR and Tokyo Ohka Kogyo are strong in photoresists (light-sensitive material) used for coating wafers. Likewise, Tokyo Electron has a high market share in manufacturing equipment.
However, looking at the industry overall, a decline in competitiveness is undeniable.
Japan’s semiconductor industry reached a golden age in the 1980s. At the time, Japan’s electronics giants accounted for roughly half of the world’s top ten companies in terms of sales. However, they were unable to break the stronghold of U.S.-based Intel in the area of CPUs (central processing units), which are at the heart of personal computers, and ended up being pushed out by Korean and Taiwanese companies.
Currently, the global semiconductor industry is led by Qualcomm and Nvidia, both U.S.-based companies, the Taiwan Semiconductor Manufacturing Company (TSMC) and South Korea-based Samsung Electronics. Not a single Japanese company holds a spot in the top ten, with Kioxia Holdings coming in at 12th place.
Meanwhile, although the U.S. semiconductor industry is a leading force in research and development, it remains behind TSMC and Samsung in terms of production. In establishing this cooperation, Japan and the U.S. “share the common goal of making a comeback,” said an executive at a Japanese semiconductor manufacturer.
Creating a stronger supply network through Japan-U.S. cooperation will also help counter the rising power of China and ensure their “security and prosperity.”
Chinese companies such as Contemporary Amperex Technology (CATL) are rapidly gaining market share in the field of secondary batteries for electric vehicles (EVs). China also controls most of the production of rare earths, used as material in magnets for EV motors, and is steadily amassing technology in semiconductors.
Faced with the possibility of China taking control of their procurement network, a total of 55 Japanese material manufacturers and automobile manufacturers in the field of automotive batteries launched the Battery Association for Supply Chain (BASC) on April 14. This new organization aims to further develop the domestic supply network.
Japan-U.S. cooperation is likely to accelerate this trend and be effective in a wide range of fields.
(Read the Sankei Shimbun report in Japanese at this link.)
Author: Michito Ida