Japan’s Contribution to Global Semiconductor Supply

The MoC signed between India and Japan will cover semiconductor development, manufacturing, research, design and talent development (Credit: BusinessToday)
The global semiconductor industry, crucial for various sectors such as automotive and electronics, has faced significant challenges due to the COVID-19 pandemic. Amid these challenges, Japan has recognized the strategic importance of semiconductors for economic security and has launched various initiatives to rejuvenate its semiconductor industry and contribute significantly to global supply.
Historically, Japan was a dominant force in the semiconductor industry, boasting a 50.3% global share in 1988. Nevertheless, this dominance has diminished, and the ongoing global semiconductor shortage has highlighted the essential role of this industry. Japanese authorities, including Ogino Yosuke from the Ministry of Economy, Trade and Industry (METI), have stressed the need to rejuvenate Japan’s semiconductor sector to ensure the nation’s future security and economic well-being. Japan’s strength lies in its strategic position within the semiconductor supply chain, specializing in the production of semiconductor materials, equipment, and certain types of chips. Japanese companies are global leaders in the production of silicon wafers, photoresists, and other critical materials essential for semiconductor manufacturing. This specialization has made Japan an indispensable part of the global semiconductor ecosystem, ensuring a steady supply of high-quality materials crucial for chip manufacturing worldwide.

Strategic Revitalization Efforts

In response to these challenges, METI formulated a robust strategy in 2021 to support the semiconductor industry, positioning it alongside the digital sector as a national priority. This strategy includes the launch of the Post-5G Fund and the Green Innovation Fund, earmarking billions for post-5G technological innovation and for leveraging semiconductors in achieving carbon neutrality. Additionally, the strategy has been updated to emphasize the development of energy-efficient semiconductors suitable for AI applications and to enhance Japan’s semiconductor manufacturing infrastructure. The aim is to increase domestic semiconductor-related sales to over JPY 15 trillion by 2030, to secure Japan’s competitive edge in the global arena.

Innovations and Collaborations: The Rapidus Initiative

Moreover, Japan is taking bold steps to advance semiconductor technology with the establishment of Rapidus. Rapidus is a significant initiative aiming to revitalize Japan’s semiconductor industry by focusing on advanced manufacturing techniques and international collaboration. Founded in August 2022 with substantial support from eight major Japanese companies, including Toyota, Sony, and others, Rapidus represents a concerted effort to regain Japan’s former stature in the semiconductor sector. The company has been established with a clear goal: to mass-produce 2-nanometer technology chips, which are expected to offer substantial improvements in performance and energy efficiency over existing technologies. Rapidus plans to start chip production in the latter half of this decade, aiming for mass production of 2nm logic chips by 2027. This move is seen as a strategic effort to catch up with global semiconductor leaders and to reposition Japan as a key player in the high-tech industry.

Collaboration forms a core part of Rapidus’s strategy. The company has partnered with IBM to develop 2 nanometer node technology. The construction of its first facility, aimed at developing and producing advanced logic semiconductors, began in September 2023. Furthermore, the establishment of Rapidus is expected to have significant economic implications for the Hokkaido region, potentially leading to the creation of a new industrial cluster and boosting local economies.

International Partnerships and Future Directions

The Japanese government’s commitment extends beyond domestic revival, emphasizing international collaboration to overcome the complexities of the semiconductor supply chain. Partnerships with countries like the United States, EU members, the United Kingdom, the Netherlands, and India are strengthening, focusing on diversifying manufacturing capabilities and enhancing R&D efforts. An example is Japan and India signing a memorandum of cooperation to strengthen the semiconductor supply chain, aiming to enhance collaboration in semiconductor design and manufacturing. This agreement illustrates Japan’s strategy to diversify its semiconductor partnerships and strengthen its position in the global supply chain, aligning with India’s ambitions to become a significant player in the semiconductor industry.

Japan’s strength in semiconductor materials and manufacturing equipment, where it holds significant global market shares, is the foundation of its strategy. Collaborative initiatives like the JOINT2 project aim to harness these strengths, bringing together companies to accelerate the development of advanced semiconductor technologies and advanced semiconductor packaging methods.
Addressing workforce challenges is also a critical component of Japan’s strategy. Efforts to restore the semiconductor industry include addressing labour shortages through reskilling programs and promoting regional collaboration to ensure a skilled and competitive workforce.

Currently, Japan holds a crucial yet narrowed position in the global semiconductor supply chain, primarily in materials and manufacturing equipment, but has seen a decline in chip manufacturing dominance. Looking ahead, Japan aims to reclaim a more central role through initiatives like the Joint2 project, focusing on advanced semiconductor development and increased domestic production. By enhancing collaboration and investment, Japan seeks to strengthen its position in cutting-edge semiconductor technology, contributing significantly to the future global supply chain.