[Peace&Chips] 'Japan's Flap Bigger Than China's'... Korea Semiconductor in the Whirlwind

Prime Minister Kishida Meets Leading Global Semiconductor Companies
Japan Aims to Revive Past Glory by Boosting Semiconductor Industry
"Japan, Not China Without Core Technology, Is the Real Concern"

Editor's NoteSemiconductors, known as the rice of modern industry. Although it's a term we hear every day, it’s often hard to explain. Peace & Chips will make the complex concepts and overall trends of the semiconductor industry easy to digest. Just place your spoon and enjoy.

Japan, which once dominated the global semiconductor industry, is busy trying to reclaim its past glory. As semiconductors emerge as key national economic and security assets, government-led semiconductor promotion policies are pouring out, showing active efforts.

Recently, there was an event that clearly demonstrated this determination. On the 18th, Japanese Prime Minister Fumio Kishida met with seven executives from Samsung Electronics, Taiwan's TSMC, U.S. companies Intel and Micron, IBM, Applied Materials, and Belgium’s semiconductor research institute IMEC at the Prime Minister’s Official Residence in Tokyo.

This meeting attracted attention because it gathered leading players from all sectors of the global semiconductor industry. Such a scene is rarely seen, so all eyes were on Prime Minister Kishida’s remarks. At the meeting, Kishida stated that Japan would support not only local investments by foreign companies but also cooperation with Japanese firms.

Japan has announced that it will include related measures in the economic and fiscal management guidelines to be prepared next month to implement such support. It is also considering subsidies worth trillions of won, accelerating its semiconductor promotion strategy. As a result, perspectives inside and outside the industry on Japan’s semiconductor promotion strategy are changing.

Japanese Prime Minister Fumio Kishida (center) met with representatives from seven foreign semiconductor manufacturers and research institutions, including Samsung Electronics, at the Prime Minister's Official Residence in Tokyo on the 18th. A commemorative photo of Prime Minister Kishida and the company representatives.
[Image source=Yonhap News]

Last August, eight Japanese companies including Sony, Kioxia, and Toyota Motor Corporation launched a semiconductor joint venture called "Rapidus." Japan’s semiconductor manufacturing competitiveness is weaker compared to South Korea and Taiwan, but Rapidus has announced its intention to break this limitation. It set a goal to mass-produce advanced 2-nanometer (nm; 1 nm is one-billionth of a meter) semiconductors by 2027.

In the foundry (semiconductor contract manufacturing) sector, 2-nanometer technology is still uncharted territory. Even the top two market leaders with outstanding technology, TSMC and Samsung Electronics, expect to begin mass production of 2-nanometer semiconductors only by 2025. Yet, a new company in Japan, which holds a negligible market share, mentioned 2-nanometer technology.

The semiconductor industry initially viewed Rapidus’s launch as having low chances of success. Interviews with industry and academia revealed that the prevailing opinion was, "Even if 2-nanometer production is possible, can they achieve competitiveness in yield (the ratio of finished products that are defect-free) and other aspects?" However, as the Japanese government has been pouring out support measures with strong determination and expanding its efforts, alternative views are emerging.

Experts say that even if Japan lags in manufacturing, its fundamental technological capabilities should not be underestimated. While we have been wary of China’s semiconductor advances, there is now an opinion that Japan’s moves should be watched even more carefully going forward.

Japan once held more than half of the global semiconductor market, but due to setbacks such as U.S. sanctions in the 1990s, its current market share is below 10%. However, it still maintains competitiveness in materials, parts, and equipment (SoBuJang) and back-end processes (the steps after wafer semiconductor production, including cutting and packaging). Especially, with the recent limits of fine processes, the importance of packaging?a back-end process that stacks or bundles multiple semiconductors to enhance performance?is increasing, and related business opportunities are expected to grow.

Professor Hyun-Sik Lim of Dongguk University (Department of Physics and Semiconductor Science) said, "China’s foundational technologies are not yet perfect, but Japan’s SoBuJang technologies are outstanding. If Japan builds on this and adds manufacturing process know-how to improve yield and secure technological capabilities, it will become a target to be much more cautious about than China."

This means Japan has fertile ground for semiconductor cultivation. In the global semiconductor race where the U.S., Taiwan, China, Europe, and now Japan are fiercely competing, the survival competition for our companies will inevitably become even more intense.

This article is from [Peace & Chips], published weekly by Asia Economy. Click subscribe to receive articles for free.

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This content was produced with the assistance of AI translation services.