Supply Instability Amid US-China Conflict
[Asia Economy Reporter Kwon Jae-hee] As semiconductor supply and demand became unstable due to the U.S.-China conflict, the Japanese government has prepared a draft growth strategy that includes measures to attract the semiconductor industry to Japan to resolve the issue.
According to the Nihon Keizai Shimbun on the 3rd, at a growth strategy meeting chaired by Chief Cabinet Secretary Kato Katsunobu the previous day, a draft was reported that includes establishing a solid system to swiftly respond and ensure that semiconductor infrastructure can be attracted to Japan by meeting conditions comparable to other countries.
The reason the Japanese government is seeking to attract the semiconductor industry is interpreted as concerns over potential problems in semiconductor procurement amid the intensifying U.S.-China confrontation and Japan aligning with the United States.
Japan imports about 64.2% of its semiconductors, with particularly high dependence on Taiwan and China.
According to the Semiconductor Industry Association (SIA) in the U.S., Taiwan accounts for about 90% of the global market share in advanced semiconductor manufacturing capacity used in smartphones and other devices, especially those with circuit line widths below 10 nanometers (one billionth of a meter).
Regarding the security importance of semiconductors, an official from the Ministry of Economy, Trade and Industry was quoted by Nihon Keizai Shimbun as saying, "Semiconductors are already like food or energy."
The Japanese government sees fostering the digital industry and expanding demand as essential to attracting the semiconductor industry. To this end, it plans to support digital investments in fields such as 5th generation mobile communications (5G), autonomous driving, smart cities, and medical robots.
The Ministry of Economy, Trade and Industry announced at the end of last month that it will provide about 19 billion yen (approximately 192.5 billion won) in subsidies to enable Taiwan's TSMC, the world's largest semiconductor foundry, to establish a research and development base in Ibaraki Prefecture, Japan.
In addition to semiconductors, investment plans related to storage batteries and next-generation data centers are also included in the draft growth strategy.
The Japanese government plans to finalize the growth strategy at a cabinet meeting this month after consultations with the ruling party.
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