Semiconductors play an increasingly important role for economies around the world. While Japan has long operated as a manufacturer and major exporter of semiconductor equipment, the global chip shortage during the COVID-19 pandemic showed that the country was vulnerable to supply chain disruptions. Since semiconductors are used in a wide variety of important technological products, the semiconductor industry is considered essential for economic success and even has become an issue of national security in Japan. Although the country accounted for more than half of the global chip production in the late 1980s, it was not able to maintain its pre-eminent position due to a variety of factors, such as the relocation of facilities to overseas production sites, the rise of other competitors, including
, a focus on vertically integrated production models, and a lack of public funding. Despite these circumstances, Japan continues to be a major player on the global stage and has formulated ambitious plans to improve its position in the coming years.
The current state of the semiconductor industry
The
size of the Japanese semiconductor market amounted to about 48.2 billion U.S. dollars in 2022 and was expected to grow to almost 49.3 billion dollars by 2024. Although Japan lacks high-end domestic production capabilities, it is home to many prominent technology companies that engage in the semiconductor business, such as Kioxia, Tokyo Electron, Renesas Electronics, Sony Semiconductor Solutions, Rohm, and Toshiba. Next to semiconductor materials, Japanese companies play a particularly important role in the production of manufacturing equipment, which is increasingly in demand as many countries invest in improving their manufacturing capacities. Japan itself is no exception to this, and both the government and the private sector have made efforts to revive and improve domestic production capabilities.
Reviving the industry
In June 2021, the Ministry of Economy, Trade and Industry (METI) published a strategy paper that emphasized the importance of semiconductors for the economy and economic security. In November of the same year, the Japanese government decided to support the semiconductor industry with a 774-billion-yen package, part of which was intended for the construction of a new foundry by
Taiwan Semiconductor Manufacturing Co. (TSMC) in Kumamoto Prefecture. In the years that followed, the government decided to grant subsidies to a variety of companies, such as Rapidus Corporation, Micron Technology, and a joint venture by Kioxia and Western Digital. In addition, Japan aims to become a world leader in power semiconductors, which are seen as a key in reducing energy consumption. A project in this regard, which involves the cooperation of Rohm, Toshiba, and Denso, is led by the New Energy and Industrial Technology Development Organization (NEDO). Among other aims, the project seeks to halve the energy loss of power management devices by 2030.
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