[Japan Semiconductor Revival]③ "Must Surpass 40 Years" The Hurdles Japan Must Overcome for Semiconductor Resurrection

Overseas Dependence and Labor Shortage Identified as Challenges
Seeking Solutions Through University Talent Development and Customized Semiconductor Production

The path ahead for Japan, which dreams of a semiconductor industry resurgence, is not all rosy. Experts point out that there are many hurdles to overcome in order to regain past glory. Since the 1986 U.S.-Japan Semiconductor Agreement, the industry has structurally contracted, and essential tasks such as industry restructuring, technology enhancement, and securing necessary labor amid low birthrates and an aging population remain.

In the semiconductor market, where fierce competition among global giants like Samsung, TSMC, and Intel is already underway, Japan is also grappling with how to differentiate itself. Although significant foreign investment has been attracted amid geopolitical tensions, there are voices questioning whether the environment is sufficiently prepared for these investments to take root.

[Image source=Yonhap News]

Chasing the Global ‘Gap’ That Emerged Since 1986

The first issue pointed out is the already significantly contracted semiconductor industry structure and lagging technological capabilities. Since losing market leadership through the 1986 semiconductor agreement with the United States, Japan’s semiconductor industry has shrunk to about one-sixth of its 1980s scale.

However, the global semiconductor industry has grown more than twofold annually since the 1980s. Japan’s international competitiveness in semiconductors has fallen behind the leading companies by over 40 years. Particularly vulnerable is the ‘logic semiconductor’ sector, which requires advanced technology. Logic semiconductors function as the brain of smartphones and data centers, determining processing performance. With Taiwan’s TSMC, Samsung, and U.S. Intel already leading the market, there are no manufacturers in Japan capable of producing these chips, making the country reliant on imports.

NHK analyzed that "Japan is about 10 years behind overseas in the logic semiconductor field." Tetsuro Higashi, chairman of Rapidus, a semiconductor group jointly funded by the government and Japanese companies, also emphasized in an interview with TBS last year that "logic semiconductors are essentially the foundational technology for the future semiconductor industry, so catching up urgently is necessary."

[Image source=Yonhap News]

Urgent Need to Secure Workforce Amid Low Birthrate and Aging Population

Following the contracted industry and insufficient technology, the low birthrate and aging population are also cited as major obstacles to Japan’s semiconductor resurgence. It is difficult to secure the necessary workforce immediately. According to the Industrial Statistics Survey published annually by the Ministry of Economy, Trade and Industry, the semiconductor workforce, which was about 230,000 in 1998, decreased to about 170,000 by 2019. Meanwhile, demand for labor has steadily increased. According to Recruit, a Japanese recruitment company, the number of job openings for semiconductor engineers was 7.4 times higher in 2021 and 13.1 times higher in 2022 compared to 2013. This has led to criticism that talent development was neglected due to industrial decline.

Nikkei Tech, a subsidiary of Nihon Keizai Shimbun (Nikkei), pointed out, "The semiconductor market will continue to expand, but Japan currently lacks the talent to meet demand," adding, "Along with active government financial support, creating an environment to attract overseas talent is an urgent task."

In response, the Japanese government plans to increase semiconductor-related departments at universities to foster talent. Kumamoto University in Kumamoto Prefecture, where a TSMC factory is being established, plans to open a semiconductor faculty next year to accept new students. Additionally, during the U.S.-Japan related talks held on the sidelines of the recent Group of Seven (G7) summit on the 21st, 11 universities from both countries, including Tohoku University in Japan and Purdue University in the U.S., agreed to establish new educational programs funded by corporate donations to nurture semiconductor talent.