Japan Imposes 'Technology Leakage Prevention' Obligation in Semiconductor Subsidy Conditions

Measures to Maintain International Competitiveness in Advanced Industries

On the 30th, Nihon Keizai Shimbun reported that the Japanese government will newly impose an obligation to prevent technology leakage abroad on companies receiving government subsidies in five sectors, including semiconductors and batteries.

According to the report, Japan's Ministry of Economy, Trade and Industry (METI) will change and apply the notification regarding subsidies in five of the 12 sectors classified as "Specified Important Goods" under the Economic Security Promotion Act: semiconductors, advanced electronic components, batteries, machine tools and industrial robots, and aircraft parts. Accordingly, companies receiving government subsidies in these five sectors will be newly obligated to prevent technology leakage abroad.

Companies receiving subsidies must submit important technologies that need to be protected from overseas leakage to METI. Submission targets include semiconductor materials and manufacturing methods for carbon fiber used in aircraft. In addition, companies must sign a pledge ensuring that key technical personnel do not export technology upon retirement, and must also identify countermeasures against technology leakage by their business partners. Furthermore, if a subsidy recipient company starts or increases production of products related to important technologies abroad, they must consult with METI in advance.

The government may demand the return of subsidies from companies that violate these rules. The plan aims to maintain the international competitiveness of advanced industries. Yoshiaki Takayama, a researcher at the Japan Institute of International Affairs, evaluated this by saying, "Preventing technology leakage of goods produced using national funds is a global trend."

Previously, the United States also prohibited companies receiving subsidies under the CHIPS and Science Act (CSA) from expanding semiconductor production capacity in China by more than 5% for ten years. As global efforts to protect advanced technologies strengthen, Japan has joined this trend as well.