Japan plans long-term strategy to strengthen semiconductor resilience

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Japan’s semiconductor industry is doomed to uselessness unless the government matches the long-term strategic visions set in the United States and China, the country’s new Minister of Economic Security has warned.

Takayuki Kobayashi told the Financial Times that Japan has historically failed to identify critical technologies that the country’s industrial economy should protect and promote to ensure it remains “indispensable” to the rest of the world.

“The question is how to establish areas in which we excel so that the international community cannot survive without Japan,” Kobayashi said in his first interview with international media.

His comments, which frame a growing dilemma for Japan in a world of growing technological nationalism, came just two weeks after new Japanese Prime Minister Fumio Kishida created the role of Minister of Economic Security.

Business leaders described the move as evidence of a growing sense of crisis among senior levels of government over the vulnerability of Japanese companies to a range of threats that they say require coordination of the government. State to deal with it.

Kobayashi, a 46-year-old Harvard Kennedy School graduate, has been given a rare and powerful mandate to intervene in economic security issues ranging from chips to rare earths and cybersecurity – a mandate that touches both commerce, finance and communications. ministries.

Kobayashi said his tenure could extend to his influence over government decisions related to the Foreign Exchange and Trade Law, which was revised in 2019 to strengthen regulations on foreign investment in Japanese companies. The overhaul resulted in listed companies being classified into three levels of national security sensitivity, leading some foreign investors to conclude that the changes were made in part to discourage activist funds.

The creation of the new position also comes as the government persuaded Taiwan Semiconductor Manufacturing Company, the world’s largest contract chip maker, to build a new manufacturing facility in Japan with what people close to the negotiations called heavy subsidies from Tokyo.

“This is just the first step,” Kobayashi said. “There would be no recovery for the Japanese semiconductor industry if we stopped here.”

He said the government needed to quickly demonstrate “a concrete commitment” to how it wanted to position the country 10 years from now, in addition to subsidies and state support to compete with other major economies.

“Only then would Japanese companies related to the semiconductor industry feel motivated to work together as part of a national effort,” Kobayashi added.

In the late 1980s, the Japanese chip industry overtook that of the United States to become the largest in the world. It has since suffered a relentless decline, although the country still plays a central role in semiconductor equipment and materials.

Echoing the initiatives of the Biden administration in the United States, part of Japan’s new growth strategy focuses on building a semiconductor supply chain self-sufficient enough to survive disruptions such as Covid-19 pandemic. Since he cannot supply all the technologies on his own, Kishida said it is essential for liberal and democratic countries to work together to keep the supply chain in friendly hands.

Kobayashi denied that Japan’s economic security measures were specifically targeted at China, saying the government had no plans to interfere in the private sector’s close trading ties with the world’s second-largest economy. “But companies must obviously take the appropriate measures in the light of the differences in legal framework, rules and practices,” he added.

Daily Bulletin

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