18 May 2023
Several major semiconductor manufacturers have announced their intentions to expand production and strengthen technology cooperation in Japan. The move comes at a time when Western allies are stepping up their efforts to reshape the global semiconductor supply chain in the wake of escalating tensions with China.
US company Micron Technology announced this week that it plans to invest about US$3.6 billion in Japan to develop advanced memory chips and to start manufacturing them by 2025. According to earlier reports by Bloomberg, the Japanese prime minister is expected to provide Micron with incentives totalling USD 1.5 billion. In addition, TSMC and Sony have formed their own partnership and plan to set up a US$7 billion chip manufacturing plant in Japan in 2021. Production is expected to start by the end of 2024 and the factory is expected to create approximately 1 500 jobs.
In April, the Japanese government issued a statement outlining its goal to triple the sales of semiconductor, component and materials manufacturers. The goal is to reach sales of JPY15 trillion (USD113 billion) by 2030, primarily through increased investment in industry development. Government data shows that in 2020, sales of chip, component and material manufacturers in Japan were approximately JPY 5 trillion, representing about 10% of the global market share.
In the context of escalating tensions between the US and China over chip technology, governments around the world are taking measures to increase domestic chip production. In the United States, the 'Chips Act' was introduced last year, offering USD 52 billion in subsidies and incentives to encourage semiconductor companies to set up manufacturing plants in the country. The European Union initiated its own 'European Chips Act' in February last year, which will provide EUR 43 billion in state support, and similarly the UK recently launched a GBP 1 billion government spending plan to support chip development.
Chips serve as the essential foundation of the modern global economy, powering a range of devices from cars to smartphones. It is estimated that the global chip industry will be worth USD 1 trillion by 2030. Taiwan currently serves as a major hub for semiconductor manufacturing, housing a significant portion of the world's production facilities and producing more than 60% of the world's semiconductors and more than 90% of the most advanced ones.