Taiwan and Japan share a critical and evolving relationship in the semiconductor industry, a partnership that is driving global technological innovation and economic growth.
As both aim for greater technological autonomy and security, their collaboration is increasingly shaped by geopolitical tensions and trade policies.
Their intertwined roles in the semiconductor supply chain are vital not only for their own prosperity, but also for global technological advancement.
Taiwan, led by Taiwan Semiconductor Manufacturing Co (TSMC), is the world leader in semiconductor manufacturing. TSMC controls more than 60 percent of the global foundry market, producing high-performance chips for industries, including smartphones, artificial intelligence (AI), automotive and consumer electronics.
Taiwan’s leadership in producing 5-nanometer and 3-nanometer chips is crucial to the global tech ecosystem, and its partnerships with major companies such as Apple, Nvidia and Qualcomm highlight the nation’s central role in shaping the future of technology. On the other hand, Japan plays a vital role in providing the materials and equipment necessary for semiconductor production.
Japanese companies, including Tokyo Ohka Kogyo and JSR Corp, supply high-quality photoresists, etching gases and specialized metals such as palladium. Those materials are essential for the photolithography process used in chip fabrication.
Taiwan’s manufacturing capabilities would be severely limited without Japan’s precision materials. That complementary relationship is exemplified by TSMC’s reliance on Japanese suppliers for advanced manufacturing technologies, reinforcing the interdependency of the two nations.
In the aftermath of a fire at a Renesas Electronics chip factory in Japan in March 2021, which disrupted the company’s automotive semiconductor production, TSMC supported Renesas by expanding its operations to stabilize the automotive chip supply chain, a key example of the importance of the two nations’ collaboration.
That collaboration showcased how Taiwan’s advanced manufacturing capabilities and Japan’s material expertise are essential for ensuring the stability of critical global supply chains.
Despite their successful partnership, competition is increasing, particularly in advanced semiconductor manufacturing.
While Taiwan leads in the production of advanced semiconductors crucial to powering AI processors, cloud computing and mobile devices, Japan excels in automotive semiconductors used in vehicles to power and control a wide range of systems, including engine management and electric vehicle propulsion, where companies including Renesas and Sony have a strong presence.
Japan maintains a specialized presence in manufacturing automotive chips, but faces challenges in competing with Taiwan’s advanced high-tech manufacturing. Due to that, Japan has been heavily investing in reducing its reliance on Taiwan by strengthening its domestic semiconductor manufacturing ecosystem.
For example, the Japanese government is investing US$1.3 billion in Rapidus Corp, a new semiconductor venture focused on developing 2-nanometer chips. While those investments show Japan’s commitment to enhancing its technological autonomy, the country still lags behind Taiwan in terms of advanced chip manufacturing. Japan’s efforts to compete in high-performance semiconductor sectors would take time, but its domestic efforts remain important.
The geopolitical context adds another layer of complexity to the Taiwan-Japan semiconductor relationship.
Taiwan’s central role in global semiconductor production has made it a focal point of geopolitical tensions, particularly amid the rising US-China rivalry.
As Taiwan faces increasing pressure from China, its semiconductor industry becomes more strategically important. Any disruption to Taiwan’s semiconductor production could have widespread consequences, from consumer electronics to automotive manufacturing. In that context, Taiwan’s security is closely tied to the global tech supply chain, making it a key player in regional and global geopolitics.
The US increasingly views Taiwan’s semiconductor industry as a vital component in countering China’s technological ambitions, which underscores the importance of safeguarding Taiwan’s production capabilities.
Japan, with its technological ambitions, also has a vested interest in Taiwan’s stability, as disruptions could lead to a cascading effect on its semiconductor supply chain and economic interests.
Recognizing those risks, Japan has been working to reduce its dependence on Taiwan. Its decision in 2019 to impose export restrictions on photoresists to TSMC underscores the vulnerabilities in the Taiwan-Japan partnership.
However, Japan’s push for greater technological autonomy would take years to bear fruit, and its semiconductor industry would also need to continue collaborating with Taiwan to remain competitive.
Fundamentally, the Taiwan-Japan semiconductor partnership is shaped by a balance of competition and cooperation. Taiwan’s leadership in advanced semiconductor manufacturing and Japan’s strength in material supply and automotive applications create a mutually beneficial relationship. However, their growing competition in areas such as high-performance chip manufacturing reflects broader tensions around technological autonomy and supply chain security.
Japan’s efforts to develop its domestic semiconductor capabilities require continued collaboration with Taiwan, which is essential to maintaining a resilient and innovative global semiconductor supply chain.
Both must navigate the challenges of competition and geopolitical risks while ensuring their partnership remains stable and mutually beneficial. Those evolving dynamics would have significant implications for the global semiconductor industry.
Taiwan’s role as a leader in advanced semiconductor manufacturing and Japan’s strength in materials and automotive applications complement each other, driving global technological progress.
Their strategic partnership remains critical to the present and future of the global semiconductor industry, even as competition and geopolitical pressures continue to reshape the landscape.
Tran Thi Mong Tuyen is a doctoral student at National Cheng Chi University, a former fellow at the Ministry of Foreign Affairs and a visiting scholar at National Taiwan University.
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