Japan’s Strategic Play in the Global Semiconductor Arena: Reviving its Legacy | by Joel Fukuzawa | Mar, 2024

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In December 2018, Kikukawa Hito, the Director of the Information Industry Division at Japan’s Ministry of Economy, Trade, and Industry (METI), along with two colleagues, Tanaka Nobuhiko, Director of the Equipment Industry Strategy Room, and Kadoya Yuichiro, Assistant Director, found themselves deliberating over a critical question: “Can Japan’s semiconductor industry continue on its current path?” This query stemmed from their rich background in Japan’s Extreme Ultraviolet Lithography (EUV) research, witnessing Japan’s decline from holding half of the global semiconductor market to a mere 10%. Despite retaining a competitive edge in semiconductor manufacturing equipment and materials, Japan lagged in advanced EUV equipment development, with Dutch company ASML leading the charge.

Triggered by a strong sense of urgency towards the offshoring of semiconductor production and potential foreign acquisitions of Japanese manufacturers, Kikukawa proposed a significant subsidy scheme to attract top-tier semiconductor manufacturers to Japan. This plan, dubbed the “CAPEX Plan,” aimed to court industry giants such as Samsung, TSMC, and Intel. Amid escalating US-China tensions in 2018, TSMC was chosen as the focal point. Supported by Bureau Chief Nishiyama Keita, a key figure with a history of consolidating Japan’s electronics sector, the initiative sought to capitalize on the geopolitical landscape to revitalize Japan’s semiconductor prowess.

The pursuit of TSMC involved a collaborative effort that saw METI officials, including Nishiyama, leveraging Japan’s academic-industry relations, as evidenced by Tokyo University’s partnership discussions with TSMC. Despite a pause in negotiations following TSMC’s announcement to build a plant in Arizona, METI’s persistence and strategic alignment with industry giants like Sony highlighted Japan’s commitment to re-establishing its semiconductor sector.

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