In recent years, Japan’s global competitiveness in the semiconductor industry has been declining, especially in terms of high-end chip technology and large-scale production capacity, which is clearly lagging behind international giants such as TSMC and Intel. However, in the face of the key role in the global semiconductor supply chain and the urgent need for technological innovation, the Japanese government realises that upgrading the domestic chip industry is not only related to the country’s economic competitiveness, but is also an important strategy to ensure future technological autonomy and security. Therefore, in recent years, the Japanese government has increased its support for the semiconductor industry, announcing a support programme of unprecedented scale aimed at restoring its central position in the global chip industry.
Current situation: technological backwardness and international competition
Japan was once the leader of the global semiconductor industry, especially in the 1980s and early 1990s, with its strong technological accumulation and innovation capabilities, Japan’s semiconductor manufacturing industry once dominated the global market. However, with the rapid development of the global semiconductor industry, especially the rise of Taiwan and South Korea and other countries, Japan gradually lost its original competitive advantage. In recent years, companies such as TSMC and Samsung have led the way in state-of-the-art process technologies, such as 5nm, 3nm and even 2nm technologies, while Japan’s semiconductor industry has made relatively slow progress in terms of technological innovation and production capacity.
At the same time, Japan’s domestic semiconductor production infrastructure faces many challenges. Although Japan has a long history of semiconductor companies such as Renesas Electronics, Fujitsu, but in advanced manufacturing technology has not been able to catch up with the international leading level. In particular, there is a clear gap between Japan and companies such as TSMC and Intel in terms of mass production and R&D capabilities for high-end chips.
Government’s new plan: 10 trillion yen support programme
In response to the current situation, the Japanese government recently announced that it will launch an unprecedented 10 trillion yen ($65 billion) support programme dedicated to boosting the domestic semiconductor industry, with a particular focus on the development and mass production of next-generation chips. This plan is expected to be approved by the Cabinet on 22 November 2024, becoming an important part of the Japanese government’s comprehensive economic programme, which is expected to have an economic benefit of nearly 160 trillion yen.
Specifically, the support programme will focus on supporting local high-end semiconductor companies in Japan, most notably Rapidus, a joint venture between eight Japanese companies, including Toyota and Sony, which is focused on the development and production of next-generation semiconductors, with a particular emphasis on innovations in application areas such as autonomous driving and artificial intelligence. The company plans to narrow the technology gap with global leaders such as TSMC and Intel by introducing 2nm technology, but according to the company’s internal assessment, Rapidus will need at least 5 trillion yen in financial support to achieve this goal.
The Japanese government’s 10 trillion yen investment plan will provide valuable financial support to local companies such as Rapidus, helping it accelerate its technological breakthroughs and mass production process. At the same time, the government also plans to accelerate the construction of Japan’s semiconductor production facilities and technological innovation through policy subsidies and financial investment, and strive to triple the sales of the domestic semiconductor industry by 2030.
Future development goal: building a globally competitive semiconductor industry
The long-term goal of the Japanese government is to restore the technological leadership of the domestic semiconductor industry and secure its stable position in the global semiconductor supply chain through this massive support programme. By 2030, Japan plans to triple the sales of domestically produced semiconductors and to build a large-scale production base including chip manufacturing through government and private co-investment. It is expected that over the next ten years, the Japanese government and companies will invest 12 trillion yen in the infrastructure of the semiconductor industry.
In addition to supporting local enterprises, Japan has also adopted the strategy of bringing in foreign investment, actively attracting leading global enterprises such as TSMC to set up manufacturing plants in Japan. In order to enhance the supply stability and technological capability of the local chip industry, the Japanese Government has provided a total of about 476 billion yen in subsidies to the semiconductor plant constructed by TSMC in Kumamoto Prefecture, and plans to continue to provide policy support for TSMC’s successor plant in the future. This initiative will not only help to enhance Japan’s domestic chip production capacity, but also provide more opportunities for local enterprises to exchange technology and co-operation.
The strategic considerations behind: global competition and economic security
The reason why the Japanese government launched this series of support programmes is not only to enhance the competitiveness of the domestic semiconductor industry, but also for the consideration of economic security and scientific and technological autonomy. In the current global semiconductor industry chain, chips have become an important area of competition among countries. Whether it is autonomous driving, artificial intelligence, or 5G, quantum computing and other cutting-edge technologies, the chip is the basic support, and the instability of the global chip supply chain has become a high concern for governments. In particular, factors such as the U.S. semiconductor technology restrictions on China and TSMC’s dominant position in the global market have prompted Japan to have to accelerate its pace in order to ensure that it is not marginalised in the global semiconductor market in the future.
In addition, through this series of measures, the Japanese government hopes to attract more foreign investment and high-end technologies to enhance domestic manufacturing capabilities. Demand for semiconductors has continued to increase globally in recent years, and Japan, as an important part of the global technology industry, needs to maintain its competitiveness in this key area to secure a place in the future technological revolution.
Conclusion
As the Japanese government invests massively in the semiconductor industry and seeks to restore its competitiveness in the global market through policy support, technological innovation, and international co-operation, this strategic plan will have a far-reaching impact on the global semiconductor industry. The investment boom in Japan and South Korea will not only intensify competition in the global semiconductor industry, but may also drive capital flows and technological innovation on a global scale. The development of Japan’s semiconductor industry in the coming years will be a key variable in the pattern of global technological competition, with important implications for the stability of the global industrial chain and future technological progress.
