Japan Semiconductor is determined to recover： attract overseas investment, set up local new enterprises, and limit the export of equipment to China.

Japanese semiconductors have experienced a "lost decade". In 1970s, Japan’s semiconductor industry was dominated by the state, and in the second half of 1980s, Japanese enterprises occupied 50% of the world. However, due to the export restriction caused by the trade friction between Japan and the United States, the profitability of Japanese enterprises declined, while the strength of Korean and Taiwan, China enterprises increased rapidly. At the same time, after losing the indispensable investment spare capacity for developing and mass-producing cutting-edge products, Japan failed to keep up with the fierce investment competition for circuit linewidth refinement in the 2010 s, and there was a technical gap for nearly 10 years.

Japan is seeking to revitalize the domestic semiconductor industry, announce the three-step strategy of semiconductor revitalization, enhance its position in the global semiconductor market supply chain, attract overseas enterprises to invest in Japan, set up a new local company to mass-produce 2-nanometer chips in 2027, and set up a cutting-edge semiconductor technology center to develop the next generation of semiconductor mass production technology.

Japanese semiconductors have fallen from 50% of the global market share to about 10%.

In the second half of 1980s, Japanese semiconductor companies occupied 50% of the global market share. However, after a "10-year technical gap", Japan’s semiconductor status declined, and its global market share fell to about 10% in recent years. Today, Japan is seeking to revitalize the domestic semiconductor industry, enhance its position in the global semiconductor market supply chain, attract overseas companies to invest in Japan, set up a new local company to mass-produce 2-nanometer chips in 2027, and set up a cutting-edge semiconductor technology center to develop the next generation of semiconductor mass production technology.

However, on the one hand, Japan plans to spend huge sums of money to purchase chip equipment and strengthen international cooperation in semiconductor supply chain, on the other hand, it restricts the export of key equipment needed to manufacture chips.

Win over overseas investment and set up a new local company to mass-produce 2-nanometer chips in 2027.

On May 18th, Japanese Prime Minister kishida fumio met with executives of seven semiconductor companies and called for more investment in Japan.

At present, American, European and Korean semiconductor companies are increasing their semiconductor investment in Japan. Micron Technology of the United States will invest up to 500 billion yen (about 25.3 billion yuan) in Japan in the next few years, including introducing equipment for producing the most advanced semiconductor memory chips in Hiroshima, Japan. American Applied Materials will recruit 800 engineers in Japan in the next few years, increasing the number of employees to 1.6 times. Intel said it will strengthen cooperation with Japanese material manufacturers and semiconductor manufacturing equipment manufacturers. Samsung galaxy will invest over 30 billion yen (about 1.5 billion yuan) to set up a new semiconductor research and development base in Kanagawa Prefecture. The Belgian Microelectronics Research Center (IMEC), known as a world-class semiconductor research and development institution, plans to set up a research base in Hokkaido to support Japanese chip startup Rapidus.

"Rapidus" means "rapidly" in Latin. Founded in August 2022, Rapidus is regarded as the "last chance" for the revitalization of Japanese semiconductors. Eight companies, including Toyota, Sony and NTT (Japan Telegraph and Telephone Company), have invested in mass production of 2 nm logic (computing) semiconductors, which are planned to be used in artificial intelligence, autonomous driving and supercomputers.

Rapidus built a factory in Chitose City, Hokkaido, and its president, Koike Chunyi, said that mass production is expected to start in 2027, and sales will reach 1 trillion yen (about 50.6 billion yuan) by 2030. It takes 2 trillion yen to build a 2-nanometer semiconductor trial production line, and 3 trillion yen to build a mass production line. The Ministry of Economy, Trade and Industry of Japan will provide a total of 330 billion yen (about 16.7 billion yuan) to Rapidus.

At present, the factory of Japanese logic semiconductor stays at the level of about 40 nanometers. Koike said that Japan is 10 -20 years behind in the field of cutting-edge logic chips, and it is not easy to recover its disadvantages. Partners have become the key to filling the gap.

Japanese semiconductors have experienced a "lost decade". According to the Nikkei Chinese Network, in the 1970s, Japan’s semiconductor industry was dominated by the state. In the second half of 1980s, Japanese enterprises occupied 50% of the world’s share, and Japanese products once swept the global market. However, due to the export restriction caused by the trade friction between Japan and the United States, the profitability of Japanese enterprises has declined, and the strength of Korean and Japanese enterprises has increased rapidly. At the same time, Japan has lost its indispensable investment spare capacity in developing and mass-producing cutting-edge products. Due to the failure to keep up with the fierce competition for investment in circuit linewidth refinement in the 2010 s, there has been a technical gap in Japan for nearly 10 years. Samsung and TSMC also insisted on making huge investments during the economic downturn, leaving behind competitors such as Japanese manufacturers and establishing a high-yield business model.

According to the report of Japan Common Network, after Japan’s semiconductor status declined, its global market share dropped to about 10% in recent years. However, due to Japan’s advantages in semiconductor manufacturing equipment and materials, the government hopes to invigorate the Japanese semiconductor industry by cooperating with overseas manufacturers.

The Japanese government also attracts overseas manufacturers to visit Japan. In addition to samsung galaxy and other companies, Nikkei Chinese Network reported that TSMC is building a factory in Kumamoto Prefecture and plans to build a second factory. According to the report of Japan Common Network, Japan has decided to provide a maximum subsidy of 476 billion yen (about 24.1 billion yuan) for TSMC’s factory in Kumamoto Prefecture.

Three steps to revitalize the semiconductor industry and establish a cutting-edge semiconductor technology center.

By 2030, Japan plans to make the sales of semiconductor-related products reach 15 trillion yen, tripling the current (5 trillion yen). In order to revitalize the semiconductor industry and enhance the capability of cutting-edge semiconductor technology, Japan has successively launched a series of measures.

According to the Japanese semiconductor revitalization strategy issued by the Ministry of Economy, Trade and Industry, the first step is to improve the basic production capacity of the Internet of Things. By 2030, the market scale of industrial equipment, personal computers, smart phones, data centers and automobiles will reach 1 trillion US dollars; The second step is to realize the next generation of semiconductor technology through US-Japan cooperation; The third step is to develop future technologies such as photoelectric fusion technology and quantum computing through global cooperation.

In June 2021, Japan’s Ministry of Economy, Trade and Industry issued the "Development Strategy for Semiconductor and Digital Industry", and jointly developed cutting-edge semiconductor technology with international advanced manufacturers to ensure the research and development and production capacity of cutting-edge semiconductors, and developed a number of innovative materials, such as SiC (silicon carbide) and GaN (gallium nitride).

Last May, the first ministerial meeting of Japan-US Business Partnership (JUCIP) reached the Basic Principles of Semiconductor Cooperation. Based on this agreement, the Ministry of Economy, Trade and Industry of Japan decided to set up a new research and development institution in July last year, and the two countries will jointly study the next generation of semiconductors. This institution is the Advanced Semiconductor Technology Center (LSTC). LSTC is an R&D base for developing the next generation of semiconductor mass production technology. It will cooperate with the national semiconductor technology center and other overseas institutions to establish an open R&D platform for Japan and overseas, and lay out technology development projects with 2 nm or more advanced process nodes. In November last year, the Ministry of Economy, Trade and Industry of Japan announced that it would build a new generation of semiconductor design and manufacturing base in the second half of the 1920s. In addition to introducing the general situation of LSTC, it also mentioned that Rapidus was selected as a research and development project to build a future semiconductor manufacturing base.

Japan is also seeking to improve its position in the global semiconductor market supply chain. According to a report by Bloomberg in April this year, Japan will spend $7 billion on chip equipment in 2024, an increase of 82%. On May 7, kishida fumio visited South Korea and held talks with South Korean President Yin Xiyue, confirming that cooperation will be strengthened to build a semiconductor supply chain. Last week, Britain and Japan pledged to establish a semiconductor partnership in Hiroshima, Japan, led by the British Ministry of Science, Innovation and Technology and the Japanese Ministry of Economy, Trade and Industry, with the aim of providing new R&D cooperation and technical exchanges between the two countries and improving the flexibility of the semiconductor supply chain.

On the one hand, it is a huge purchase, strengthening international cooperation in semiconductor supply chain, on the other hand, it is to restrict the export of key equipment needed to manufacture chips. On May 23rd, the Ministry of Economy, Trade and Industry of Japan announced that 23 categories, including cutting-edge semiconductor manufacturing equipment, were included in the list of export management restrictions, which is expected to be implemented on July 23rd. The 23 categories include manufacturing equipment for extreme ultraviolet (EUV) related products, and etching equipment for three-dimensional stacked storage elements. A spokesman for China’s Ministry of Commerce responded that the measures announced by Japan will seriously damage the interests of Chinese and Japanese enterprises, seriously damage the economic and trade cooperation between China and Japan, destroy the global semiconductor industry pattern, and impact the security and stability of the industrial chain and supply chain. Japan should proceed from safeguarding international economic and trade rules and Sino-Japanese economic and trade cooperation, immediately correct the wrong practices, avoid relevant measures to hinder the normal cooperation and development of the semiconductor industry between the two countries, and earnestly safeguard the stability of the global semiconductor industry chain supply chain.