13 December 2023 · 3 min read
Author: Matilde Castleberry
Welcome back aboard the "Semiconductor Express." In our last instalment, we ventured through the nanoscopic technologies and national policies of Taiwan and South Korea. Today, we set our sights on other two influential destinations, so fasten your seatbelts as we explore Japan and the United States.
With a 1,152.62 km jump towards the east from Seoul, we land in Tokyo, a global hub for technology. During the late 1980s, Japan was a leader in chip technology, but after the decline of the industry at the beginning of the 21st century it has gone back on track to try to re-establish its leading role in the sector. Japanese leadership remains in photoresists: five Japanese companies (among which JSR) manufacture around 90% of the global supply.
In more recent years, the government has enacted several policies aimed at internal self-sufficiency and the preservation of favourable trading with other countries. In 2021, the Ministry of Economy, Trade and Industry (METI) announced a Growth Strategy under the name of ‘Strategy for Semiconductor & Digital Industry’, including €6.4 billion to invest in domestic production. The strategy has three main objectives: establishing manufacturing bases, developing cutting-edge technologies, and forming new alliances - in particular with the United States for next-generation technologies.
In May 2022, the two countries agreed on Basic Principles on Semiconductor Cooperation and set up a task force to cooperate on the next generation of semiconductors. Moreover, they established a Joint Research centre to develop faster and more efficient chips.
Japan has also boosted its semiconductor sector thanks to a TSMC investment of €8 billion by contributing €3.3 billion to the new factory plant in Kumamoto prefecture. A new investment was also made for Rapidus, a semiconductor manufacturer headquarter that aims to produce 2nm chips by 2027.
Japan chose both a domestic-oriented approach, by allowing big Japanese corporations such as SoftBank, Toyota, and Sony to work together,as well as an international approach by fostering cooperation with overseas manufacturers.
United States of America
While talking about Japanese Partners we mentioned the United States, so this is where we will land now, Washington. As anticipated while we were in Tokyo, the US is strengthening its semiconductor sector. Its reasons are also similar to the ones we underlined in our first article. However, one of these reasons is of central importance for the Biden administration, China.
The growing rivalry between the two countries has reached the semiconductor industry, as reported by the White House. In consideration of chips’ vital role in the economy, the US chose to target the sector in the trade war with China. The beneficiaries of the 2022 ‘CHIPS and Science Act’ will not be allowed to build certain facilities in China or other countries considered ‘of concern’ - among which Russia - for 10 years. Exports of cutting-edge chips are not allowed because of their role in the military sector. US citizens and companies worldwide are not allowed to support China’s manufacturing of Chips and are prohibited from supplying hardware and software that contain American technology.
The importance of semiconductors was publicly acknowledged by the Biden administration in 2022 which identified them as critical goods announcing further legislation would pass. A few months later, the ‘CHIPS and Science Act’ passed and €49.5 billion was allocated for it, €37 billion of which were allocated to manufacturing incentives divided among the production of chips used in the car and defence industry (€1.88 billion), R&D (€12.4 billion) and supply chain and communication technology (€470 million). Additionally, the Act offers a 25% investment tax credit, equivalent to €22.8 billion, for capital expenditures associated with the manufacturing of chips and related equipment.
Just as in Japan, however, the allocation of investment and resources is planned not only domestically but globally, in an attempt to create safer and more efficient Value Chains. The ‘Chip 4 Alliance’ was proposed by President Biden in 2022 as an initiative to keep China’s chip industry at bay. The Alliance is made up of four out of five main producers of semiconductors in the world, with the exclusion, of course, of China. The USA, Japan, South Korea and Taiwan coalition had a hard time coming together because of the possible retaliation coming from China that would deeply affect the South Korean economy. However, it seems that with the recent intensified aggressions by China and the US-ROK Leaders’ Joint Statement, the Alliance - also known as the ‘Fab 4’ - could become a reality.
We departed from Tokyo and concluded our second part of the journey aboard the Semiconductors express in the Silicon Valley. We’ve witnessed convergence of policy, innovation and expertise driving technology. But our adventure isn't over just yet! In our next ride, we'll embark on the final part of our journey, returning home after a quick stop in Beijing to unveil its semiconductor dynamic landscape. So sit back, relax, and prepare to discover China’s chips revolution.