From "half the country" to "Sunset" Japan is gradually withdrawing from the chip competition stage.

August 18, as the US government recently announced that it would invest a huge amount of money in the chip field, the competition between China and the United States in the chip field is becoming increasingly fierce. At the same time, however, Japan, which once accounted for half of the global semiconductor industry, is gradually withdrawing from the chip competition.

Although the Japanese cabinet has recently approved an ambitious technology revitalization strategy in the hope of regaining its leading position in the chip industry, a lack of financial funds could seriously limit Japan's pace. Japan's influence in the global chip industry is likely to gradually decline.

Japan may withdraw from the chip competition completely by 2030

After "lost 30 years", Japan, which once accounted for half of the global chip industry, is watching its former customers gradually lose to lower-cost competitors, and its leading position in cutting-edge chip production technology is also being lost.

According to the Ministry of economy, Trade and Industry, Japan's share of global chip manufacturing has fallen from 50 per cent in the past to less than 10 per cent; data from IC Insights, a well-known semiconductor consultancy, show a similar result: Japan accounted for 50 per cent of the global chip industry in 1990, while Japan now has only 6 per cent.

Japan's share of the global chip industry is expected to be zero by 2030, according to a document released by Japan's Ministry of economy, Trade and Industry earlier this year.

At a time when China and the United States are competing fiercely in the field of chips, Japanese political leaders have already felt the crisis that they may withdraw from the competition.

In May, former Japanese Prime Minister Shinzo Abe said at a party meeting of the Liberal Democratic Party: "We cannot continue what we have been doing. We have to do something at a completely different level."

Japan urgently needs to retain the existing leading chip companies.

At present, among Japanese enterprises, the companies that still maintain a leading position in the global chip industry are mainly upstream companies that provide wafers, chemical films and manufacturing equipment for chip manufacturers, including wafer company Shinyue Chemical, Sumco, photoresist supplier JSR, semiconductor equipment manufacturer Dazhong (Dainippon Screen) and Tokyo Electronics, etc.

At present, the main concern of the Japanese government is that as the United States attracts Asian chip manufacturing giants such as TSMC to the United States, these remaining semiconductor segment giants in Japan may also leave Japan and follow suit to the United States.

Kazumi Nishikawa, director of the IT industrial department of Japan's Ministry of economy, Trade and Industry, believes that although enterprises may continue to build factories in Japan and export in the short term, "suppliers are usually as close as possible," so although this change may not happen immediately, "it may happen in the long run." "

Earlier, a spokesman for JSR had said: "We are always ready to respond to policy changes in each country." The company has set up factories in Japan, Belgium and the United States to produce photoresist.

In order to maintain its industrial advantage, Japan urgently needs to attract chipmakers to Japan. At present, Japan has taken the first step: TSMC is considering plans to build a chip manufacturing plant in Japan.

By far, however, TSMC's biggest overseas investment remains the $12 billion plant it is building in Arizona.

Lack of money may extinguish Japan's dream of becoming a chip power

In June this year, the Japanese cabinet approved a science and technology revitalization strategy put forward by Japan's Ministry of economy, Trade and Industry. An important step in this strategy is to turn Japan into the data centre of Asia, which will generate huge demand for semiconductors and attract chipmakers to set up factories in Japan.

The strategic plan sounds good, but the Japanese cabinet may be a little cash-strapped for the time being.

Japan's Ministry of economy, Trade and Industry has yet to specify how much money it thinks it needs to spend to boost the technology industry, but so far, the Japanese cabinet has allocated only 500 billion yen ($4.5 billion) to strengthen the science and technology supply chain. to help companies solve the shortage of chips and other components during the novel coronavirus epidemic.

Compared with the massive investment of other countries, this is only a drop in the ocean.

The latest bill approved by the U.S. Senate authorizes $190 billion in public funds for new technologies, of which $54 billion is for the chip industry, while the European Union plans to spend 135 billion euros ($159 billion) on the digital economy.

In South Korea, companies such as Samsung and SK Hynix have pledged $450 billion over the next decade, while TSMC has pledged $100 billion over the next three years.

The Japan Electronics and Information Technology Industry Association said in an email: "at the current level of support, Japan's semiconductor industry is in a difficult situation, and we hope that the government will provide incentives comparable to those in other parts of the world."

Amari Akira, Japan's former minister of economy and finance, said to the outside world that given Japan's financial situation, it will be difficult for Japan to compete with the United States, the European Union and China.