Overseas partnerships eyed for domestic chipmakers

The government intends to invite overseas manufacturers capable of making advanced semiconductors to take part in joint projects in Japan, The Yomiuri Shimbun has learned.

The endeavor is to be centered around the Taiwan Semiconductor Manufacturing Co., or TSMC, which has some of the world’s most advanced technology.

The government is coordinating financial aid for building factories and other purposes, aiming to create partnerships for Japanese companies, whose strengths lie in manufacturing equipment and materials, and to rebuild the domestic semiconductor industry, which is being overtaken by overseas competitors.

When they enter into joint development projects with major domestic semiconductor manufacturing equipment makers such as Tokyo Electron Ltd., research institutes and others, the overseas manufacturers would be eligible to receive aid on the scale of hundreds of billions of yen over several years.

Although there are many highly competitive manufacturers in Japan specializing in semiconductor-making equipment and materials, domestic

nished products do not reach the level of overseas rms.

e goal is to attract leading overseas chipmakers willing to join forces with Japanese companies to ensure Japan has the technology to manufacture cutting-edge semiconductors.

A wave of protectionism is sweeping the world in the wake of U.S.-China trade friction. When added to the spread of the new coronavirus pandemic, there is a growing need to secure domestic production capacity for products related to national security.

FALLING BEHIND

China in particular is trying to build systems in its hightech sectors to enable domestic companies to produce nished products, including semiconductors, all on their own. is could someday pose a threat.

The Japanese government has decided that the cooperation of overseas companies is essential for quickly creating a manufacturing system for advanced semiconductors.

Semiconductors are a core component that can be considered the heart of smartphones and personal computers. The advancing digitization of society has increased their importance, with fierce competition over developing new products.

The government has until now insisted on purely domestic “rising sun semiconductors” by urging Japanese firms to reorganize and collaborate, but these e orts have failed.

To respond to a rapidly changing digital age, the government decided it needed to change course to actively incorporate know-how from overseas manufacturers of advanced semiconductors.

Japan’s inferiority truly stands out in the advanced semiconductors that are indispensable for the high-speed, large-capacity 5G communication standard.

TMSC and other Taiwan companies hold 40% of global manufacturing capacity, followed by U.S. companies such as Intel Corp. that account for 30% and South Korean firms that have 20%. Japan, on the other hand, has not a single factory.

The United States, South Korea and Taiwan also have about 80% of the manufacturing capacity for communications semiconductors used in smartphones and other mobile devices.

Japan had its own age of glory. In the 1980s and early ’90s, firms including NEC Corp., and Toshiba Corp. expanded their share of the market for high-performance storage media used in corporate computers and servers.

However, Japan’s dominance began to fade when personal computers entered the mainstream in the late ’90s, with resurgent U.S. rms and rising South Korean companies that made focused investments in research and development grabbing market share.

Japanese rms tried to ght back by forming domestic alliances such as Elpida Memory Inc. and Renesas Electronics Corp. out of the integrated semiconductor businesses of

rms such as Hitachi Ltd. and NEC.

TECHNOLOGY EXODUS

Yet, semiconductor research and development has heated up due to the spread of smartphones and other factors, and now requires an annual investment on the scale of several hundred billion to ¥1 trillion. Japanese rms, which were late to the game, have found it difcult to regain ground. The Economy, Trade and Industry Ministry has decided to focus its endeavor around TSMC, which is considered one of the “big three” chipmakers, along with Samsung Electronics Co. of South Korea and Intel of the United States. The goal is to secure manufacturing bases in Japan to prevent any interruption in the supply of semiconductors.

TSMC is deepening its ties to Japan, such as by establishing a joint research institute on semiconductor development with the University of Tokyo in November.

e ministry is also considering partnerships with Samsung and companies from the United States and Europe.

However, the United States and China are trying to improve their domestic semiconductor production capacities, and have taken the lead by offering trillions of yen in assistance.

In May, the United States banned TSMC from shipping semiconductors made using manufacturing equipment based on American technology to Chinese IT giant Huawei Technologies Co., and had TSMC build its factory in the United States, ahead of Japan.

Japan still has companies that produce high-quality manufacturing equipment and materials for semiconductors, but there have been moves to relocate production bases overseas.

To halt the technology exodus, a powerful coalition of leading Japanese rms needs to be formed as soon as possible.