[Japan's Semiconductor Revival]② Japan Aims to Become the Second 'Semiconductor Shield' Amid Rising Taiwan Strait Tensions

"Semiconductor Technology is the Guarantee of Economic Security"

"I have repeatedly mentioned that Japan will collapse without solid advanced semiconductor technology. Our company is gaining attention from the perspective that semiconductor technology is the path to ensuring economic security. We will establish mass production technology for advanced semiconductors at the 2-nanometer (nm; 1 nm = one billionth of a meter) level through international cooperation."

Atsuyoshi Koike, CEO of Rapidus, a semiconductor company jointly funded by major Japanese corporations, stated this in an interview with Nihon Keizai (Nikkei) newspaper on the 18th. He emphasized that the recent efforts by the Japanese government and companies to revive the semiconductor industry are not merely for economic stimulus but are also being pursued from a national security perspective.

The concept of economic security guaranteed by semiconductors, as mentioned by CEO Koike, has already been continuously emphasized by the Japanese government. At SEMICON Japan, a semiconductor exhibition held in Tokyo last December, Akira Amari, a member of the ruling Liberal Democratic Party and chairman of the Semiconductor Strategy Promotion Parliamentary League, said in his opening speech, "The reason Japan must reengage in semiconductors under the current circumstances is clear. If the Taiwan Strait is blocked, 70-80% of the supply of cutting-edge logic semiconductors will stop," adding, "We cannot connect with China. It is important to ally with the U.S. and Europe, with whom we can share values at both corporate and government levels."

In the geopolitical crisis surrounding the Taiwan Strait, Japan becoming a semiconductor production base that can replace Taiwan would greatly aid national security. The so-called "Silicon Shield" theory, which originally referred to Taiwan, posits that the semiconductor industry serves as a protector of national security. Because TSMC holds such a dominant position in the semiconductor market, China cannot recklessly attack Taiwan to protect its own industry. However, since the outbreak of the Ukraine war, concerns have grown that a localized conflict could break out in Taiwan at any time, leading to forecasts that Japan could become the new target country for the semiconductor shield, replacing Taiwan.

[Image source=Reuters Yonhap News]

In fact, the possibility of a Chinese invasion of Taiwan, including the Taiwan mainland, and the likelihood of localized conflicts between the U.S. and China in the Taiwan Strait area are considered very high. On the 24th (local time), the U.S. House of Representatives' China Strategy Competition Subcommittee released a report titled "Uighur Genocide and Proposals Regarding Taiwan," stating, "The aggressive attitude of the Chinese Communist Party is causing cracks in the peace and stability of the Taiwan Strait and raising serious concerns about the prospect of overt military actions, including invasion," emphasizing that "it is politically, security-wise, and economically beneficial for the U.S. to deter China's military aggression toward Taiwan." Inside and outside the U.S., the dominant view is that China's invasion of Taiwan will occur around 2027, the target year for the modernization of the Chinese military.

Investor reactions to Taiwanese semiconductors have also turned unprecedentedly pessimistic. On the 11th of last month, Warren Buffett, the world-renowned investment expert and chairman of Berkshire Hathaway, shocked Taiwan and beyond by announcing that he had sold all his shares in Taiwan's TSMC. He stated, "Due to the risk of war in Taiwan, I sold most of my $4.1 billion (about 5.4 trillion KRW) stake in Taiwan Semiconductor Manufacturing Company (TSMC) within one fiscal quarter last year," adding, "Geopolitical tensions are a factor to consider, and no matter how well-managed the world's largest semiconductor manufacturer by volume is, there are better places to invest capital."

Ultimately, as the U.S.-China rivalry over Taiwan intensifies, Japan's attractiveness as an alternative semiconductor supply chain is expected to increase further. If Japan's semiconductor industry enhances its technological capabilities based on cooperation with the U.S. and Europe under the shared goal of containing China, there is also a possibility that the positions of existing semiconductor powerhouses South Korea and Taiwan could be threatened.