As much as the US pines for the good old days of global semiconductor supremacy, Japan feels its loss of glory even more.
Once a dominant name in electronic components, the nation has been overtaken by Taiwan, South Korea, and, more recently, China. Yet Tokyo might have a viable plan to revitalize its domestic sector.
“Unlike the purely domestic, independent way it was done in the past, I think we need to cooperate with overseas counterparts,” Akira Amari, a former economy minister and senior member of the ruling Liberal Democratic Party, told Bloomberg News’ Isabel Reynolds and Emi Nobuhiro this week.
Photo: Pichi Chuang, Reuters
That is remarkable pragmatism for a country whose industrial policy has largely revolved around protecting and isolating its companies to preserve national identity. Yet three decades of decline show that past policies are just not cutting it.
In 1988, Japan commanded 50 percent of the global semiconductor industry, according to a presentation this month from the Japanese Ministry of Economy, Trade and Industry that cited data from research firm Omdia.
Back then, names such as NEC Corp, Toshiba Corp, Hitachi Ltd and Fujitsu Semiconductor Ltd occupied six of the top 10 places in market share, alongside US giants Intel Corp and Motorola Solutions Inc.
By 2019, Japan accounted for 10 percent. The US had climbed to 50 percent, due to the ascent of chip designers like Qualcomm Inc, Nvidia Corp and Advanced Micro Devices Inc.
These US firms rose thanks to a bifurcated business model aided by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), an anchor tenant in Taiwan’s noted science parks. The arrangement reflects complementary skill sets. Rather than both design and manufacture a chip, as was once the case, most US companies now just outsource to foundries like TSMC.
Amari said that TSMC is exactly the type of foreign partner that Japanese companies should work with, since it is the world’s largest maker of non-memory semiconductors.
His words carry weight, given that he is heading a party working group on chip strategy as part of Japanese Prime Minister Yoshihide Suga’s policy to incorporate industry plans into the government’s growth plans.
Japan remains a global leader in the equipment and materials used for production. As chips get increasingly more difficult to make, tighter integration across the supply chain is inevitable.
Taiwanese companies, including TSMC and United Microelectronics Corp (聯電), have a lot to offer.
The Taiwan-Japan relationship is also becoming one of the closest in East Asia. Tokyo last week donated 1.24 million doses of much-needed COVID-19 vaccine as Taipei struggles to contain an outbreak. They share close trade, cultural and tourism ties, and feel increasing economic and military tensions from Beijing.
The idea of semiconductor cooperation is not without precedent. More than a decade ago, Yukio Sakamoto, president of Japan’s then-largest memory chipmaker, Elpida Memory Inc, tried to rally together a consortium of local and Taiwanese companies to battle against industry giants Samsung Electronics Co and Micron Corp.
Japan’s semiconductor sector was already on the slide. Elpida was formed by the merger of memory divisions from NEC and Hitachi in 1999, a time when the nation’s share had already fallen below 30 percent.
Sakamoto did not think that either the Japanese or Taiwanese firms could survive on their own.
“We don’t have the scale,” he said in 2010.
Sakamoto’s proposal fell through amid opposition from Taiwanese companies and political pressure in Taipei. Within two years, his company had filed for bankruptcy and Taiwanese rivals largely exited the computer memory industry.
The mood is vastly different now. TSMC in February said it plans to set up a Japan research center primarily centered on materials development so that it can tap into the nation’s deep pool of chemical engineers.
The ministry hopes to take it further, and expects to offer strong incentives to lure a foreign chip foundry to Japan, Kazumi Nishikawa of the ministry’s IT Industry Division told Bloomberg News.
Politically, both governments are crucially aware of the need to cooperate, and jointly work with the US, to hold off China’s rising strength.
Chinese companies have increased their share of Apple Inc’s orders, a benchmark for the global electronics supply chain, and Beijing is willing to spend as much as it takes to ensure its chip industry gains traction.
Not content with being the king of chip design, the US now sees lack of manufacturing capacity as a threat to national security. Washington is looking to spend more than US$30 billion to get back in the game, increasing the urgency for other nations to cement their own plans.
With semiconductors becoming a key weapon in the technology cold war, Taipei and Tokyo would be smart to team up.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
RSS