Japan’s quest to revive its semiconductor industry
In the 1980s, Japan was the dominant player in the semiconductor market. But huge shifts in the way the chip supply chain operated eroded that leading-edge.
Countries like Taiwan with TSMC, the world’s largest and most advanced semiconductor manufacturer, began to dominate in the production of chips. The U.S. is key in areas like design. While the Netherlands has ASML, a company that makes tools required to manufacture cutting-edge chips.
Japan is now on a drive to revitalize its semiconductor industry.
Tokyo has unlocked billions of dollars of subsidies for the sector. At the heart of its revival efforts is Rapidus Corporation, a company founded in 2022 by the Japanese government and eight domestic companies to develop and manufacture advanced semiconductors.
Rapidus Corporation aims to manufacture 2 nanometer chips by 2027, as it looks to catch up to TSMC and Samsung.
In this episode of Beyond the Valley, Tom Chitty and I are joined by Fei Xue from the Economist Intelligence Unit (EIU), to talk about Japan’s efforts to reignite its domestic semiconductor industry.
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Here is a transcript of the “Beyond the Valley” episode released on August 6, 2024. It has been edited for clarity and brevity.
Tom Chitty
By now, you’re probably aware of the importance of semiconductors. They’re in everything from smartphones to running shoes, and are a vital component in the development of Gen AI. But you may not know that back in the 1980s Japan occupied more than half of the global semiconductor market. Since then, however, other countries have led the way as they scramble to secure their chip supply chains. Now Japan, with the backing of both government and business, is planning to revitalize their semiconductor industry and have begun a quest to develop the world’s most advanced microchip. Our guest this week is a senior analyst at the Economist Intelligence Unit. Created in 1946 the EIU, as it’s otherwise known, is a research and analysis division of The Economist Group, the sister company to The Economist newspaper. He focuses on North East Asia, providing forecasts and analysis on economic development, public policy and International Relations in the region. Fei Xue, thank you for joining Beyond the Valley.
Fei Xue
Thank you. Glad to be here today.
Tom Chitty
Well, let’s get cracking for our listeners. Summarize how important semiconductors [are], I did at the start, but just to give an understanding of why people should care about what we’re talking about today.
Fei Xue
Essentially semiconductors [are] more like a commodity nowadays, and we use this very small component everywhere in not only electronics devices, but also, like you said, even running shoes. We now use that to measure things. And eventually, I think, because the moving…
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