Japan, dreaming of reviving the ‘semiconductor empire’, invited 7 global semiconductor companies

Joint participation of Japanese companies and semiconductor manufacturers… After catching up with the technology gap in the semiconductor industry

’Rapidus’ is a semiconductor manufacturing company jointly invested by major Japanese conglomerates, including Toyota Motor Corporation, Kioxia, Sony, NTT, Softbank, NEC, Denso, and Mitsubishi UFJ Bank, on November 11 last year. Eight companies contributed 7 billion yen (approximately 66.7 billion won) each, received 70 billion yen (approximately 666.6 billion won) from the Japanese government, and partnered with IBM, a leading American big tech company. Lapidus also decided to forge a technical cooperation with the Belgian Integrated Semiconductor Research Center (IMEC), Europe’s top semiconductor R&D institution. Rapidus plans to invest 5 trillion yen (about 48 trillion won) in mass production of 2nm (nanometer: 1nm = 1 billionth of a meter) high-tech semiconductor and mass-produce it by 2027.

Lapidus means “quick” in Latin. It is a name that contains the determination to quickly catch up with the technological gap in the semiconductor industry with Korea and Taiwan. In fact, Lapidus has set a goal of developing and mass-producing cutting-edge semiconductor technology essential for fields that process large amounts of data at high speed, such as supercomputers, autonomous driving, artificial intelligence (AI), and smart cities. When Lapidus decided to build a semiconductor plant in Chitose, Hokkaido, the Japanese government decided to provide additional 260 billion yen (about 2.48 trillion won) in April.

If Lapidus succeeds in developing next-generation semiconductors, participating companies are expected to utilize them in their respective fields. Toyota Motor Corporation is the world’s largest automobile company, and Sony is the world’s No. 1 company in the field of image sensors. NTT is Japan’s largest telecommunications company, and Kioxia is the world’s second largest semiconductor NAND flash memory company. SoftBank is investing in hundreds of AI startups around the world. Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura said, “Semiconductors are very important from the viewpoint of economic security,” and emphasized, “Japanese public and private sectors must unite as one to strengthen semiconductor competitiveness.”

The Japanese government and companies are fighting all-out war to revive the ‘heyday of semiconductors’ in the 1980s. US President Joe Biden defined semiconductors as “a 21st-century horseshoe nail.” This is because semiconductors are essential in high-tech industries such as automobiles and home appliances as well as various weapons and military industries. Beyond the competition between companies, it is also the core of competition for technological supremacy in each country.

The Japanese semiconductor industry dominated the world market in the late 1980s, but now its market share has shrunk to less than 10%. This is why the Japanese government and companies are spurring semiconductor development to reenact the ‘past glory’. Japan’s Ministry of Economy, Trade and Industry has decided to promote the ‘semiconductor and digital industry strategy’ to expand the semiconductor industry’s sales to 15 trillion yen (about 143 trillion won), three times compared to 2020 by 2030. The Japanese government judged that if the Japanese government relied on foreign companies for semiconductors, which are key to national security as well as the economy, its national power could decline. The Japanese government has selected △Securing a semiconductor manufacturing base in the country △Development of design technology △Research on future technologies such as quantum computers as key tasks.

In the 1980s, the Japanese government actively fostered the semiconductor industry through massive subsidies, low-interest loans, and R&D budget support. As a result, the DRAM market share of Japanese semiconductor companies soared from 25% in 1980 to 80% in 1987. There were also times when six Japanese companies (NEC, Toshiba, Hitachi, Fujitsu, Mitsubishi, and Matsushita) were included in the world’s top 10 semiconductor companies. At the time, the American press called Japan’s seizure of DRAM the ‘second Pearl Harbor attack’. In 1984, Intel, a world-renowned semiconductor manufacturer in the United States, closed its DRAM business due to the Japanese offensive.

The US wasn’t alone either. Then-U.S. President Ronald Reagan ordered the Department of Commerce in 1985 to investigate whether Japanese semiconductor companies were dumping. US semiconductor manufacturer Micron also filed an anti-dumping lawsuit against seven Japanese semiconductor companies including NEC, Hitachi, Mitsubishi and Toshiba. In response to the all-out offensive of the United States, Japan raised the white flag. In 1986, the Japanese government signed the ‘US-Japan Semiconductor Agreement’ with the US government to expand the US semiconductor market from 10% to 20%.

In 1987, the U.S. government took additional retaliatory measures under Article 301 of the Trade Act, claiming that Japan violated the Semiconductor Agreement by causing a dumping problem in a third country. The Japanese semiconductor industry had no choice but to walk the path of decline. In 1992, US Intel took away the title of the world’s No. 1 semiconductor company, which had been held by Japan’s NEC. Coincidentally, 1992 was the year that ‘Japan’s lost 30 years’ began.

The Japanese government has been actively attracting investment from foreign companies to establish semiconductor production and R&D bases in the country. On May 18, Japanese Prime Minister Fumio Kishida met with Kye-hyeon Kye, head of Samsung Electronics Semiconductor (DS) Division, TSMC Chairman Ryu De-in, and Intel CEO Pat Gelsinger, as well as seven semiconductor companies around the world, including IBM, Micron, and Applied Materials. A typical example is inviting the representative to the Prime Minister’s residence and asking for investment in Japan. Japan’s ‘Nihon Keizai Shimbun’ reported, “It is unusual for the representatives of major semiconductor conglomerates in the world to gather in one place.” did.

Micron was the first to come up with a big investment plan. Sanjay Merotra, CEO of Micron, decided to invest 500 billion yen (about 4.8 trillion won) in Japan by 2025 to expand the Hiroshima plant. He also announced that he would produce next-generation memory chips by introducing state-of-the-art extreme ultraviolet (EUV) lithography equipment from ASML of the Netherlands, which is essential for the ultra-fine semiconductor process. The Japanese government plans to provide subsidies of 200 billion yen (approximately 1.9 trillion won).

Samsung Electronics also plans to invest 30 billion yen (approximately 285.8 billion won) in Yokohama, Kanagawa Prefecture, to build R&D facilities such as a 3D semiconductor prototype line. The Japanese government has decided to provide subsidies of 10 billion yen (approximately 95.3 billion won). Intel announced its policy to strengthen partnerships with Japanese semiconductor materials and equipment companies. TSMC plans to build a second semiconductor plant in Japan. TSMC is already building a semiconductor plant in Kikuyo-machi, Kumamoto Prefecture, at a total cost of 8.6 billion dollars (approximately 11.34 trillion won). The plant is aiming for operation at the end of 2024 and has received 476 billion yen (approximately 4.5336 trillion won) of subsidies from the Japanese government.

Japan has so far attracted all the best companies in each field of semiconductors, such as foundry (TSMC), DRAM (Micron), and back-end process and packaging (TSMC, Samsung Electronics, and Intel). Japanese companies have already secured production bases for all types of semiconductors, including NAND flash (Kioxia) and automotive semiconductors (Renesas), which are already being produced. It should be seen that the Japanese government’s plan to revive the semiconductor industry is reaping results beyond expectations.

If South Korea and Taiwan, the main pillars of the semiconductor industry, suffer from geopolitical issues, Japan can replace them. From the standpoint of semiconductor companies, Japan is the best ‘test bed’. There are information technology (IT) device companies such as Sony, Nintendo, Toshiba, and Kyocera, telecommunications companies such as NTT and Softbank, and automobile conglomerates whose demand for semiconductors has recently increased rapidly. In particular, Japan is a strong country in semiconductor equipment, materials, and parts. Its semiconductor equipment market share is 35%, ranking second in the world after the United States (40%), and semiconductor materials are number one with 55%.

US President Joe Biden (left) and Japanese Prime Minister Fumio Kishida greet each other prior to the G7 summit held in Hiroshima, Japan on May 18. [AP]

Behind Japan is the United States. Ironically, the United States, which destroyed the Japanese semiconductor industry, is strengthening cooperation with Japan in the field of semiconductors and other advanced technologies. The United States and Japan joined hands to keep China in check. The Japanese government plans to establish the Advanced Semiconductor Technology Center (LSTC), an advanced semiconductor research base, under an agreement with the US government this year. LSTC is expected to jointly conduct advanced semiconductor development research with the US National Science and Technology Council (NSTC). The Japanese government has decided to provide 350 billion yen (approximately 3.33 trillion won) to LSTC.

The US-Japan semiconductor alliance seems to be getting stronger. Recently, ARM, a global semiconductor design company under Softbank, entered into a strategic partnership with Intel. IBM and Google have decided to support 150 million dollars (approximately 197.8 billion won) for joint research on quantum computers between the University of Chicago and the University of Tokyo in Japan. The two universities plan to develop a quantum computer with 100,000 qubits within 10 years. Since quantum computers can process data simultaneously, they are expected to be used to solve problems that cannot be solved with traditional computers.

Behind this move, there is also a purpose to check China, which has recently invested heavily in quantum computers for military purposes. President Biden and Prime Minister Kishida held a separate summit prior to the G7 summit in Hiroshima, Japan, and agreed to strengthen cooperation in cutting-edge technologies such as semiconductors, AI, and quantum computers. Attention is focusing on whether Japan can regain its reputation as a ‘semiconductor empire’ in the future.

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《This article
Weekly Donga
It was published in issue 1391》

Janghoon Lee International Affairs Analyst [email protected]

Source: Donga

Mark

Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.