[Chip Talk] Japan Raises the Anchor for Semiconductor Revival... Also Considering the Inflation Reduction Act

Record-Breaking SEMICON Japan Concludes
Overseas Companies Increase 3.6 Times from Last Year

Japanese Government Offers Subsidies and Tax Benefits for Overseas Companies Building Factories Domestically

The true value of Japan, which has embarked on a comeback to regain its status as a semiconductor powerhouse, was revealed at the world semiconductor exhibition 'SEMICON Japan 2023,' held over three days starting from the 13th. To mark this exhibition at Tokyo Big Sight as the prologue to Japan's semiconductor revival, companies and the government united. The event was held on the largest scale ever, with a significant influx of overseas participating companies and a large deployment of government officials.

The results of this event, which attracted global attention, are expected to become apparent in earnest from next year. The Japanese government has prepared various subsidies and support systems to attract overseas semiconductor factories to major regions in Japan and plans to implement a 'Japanese version of the Inflation Reduction Act (IRA)' that provides tax benefits for semiconductors produced in domestic factories. Overseas companies are also responding to Japan's hospitality, signaling even fiercer semiconductor competition ahead.

The 'Semicon Japan 2023' exhibition hall bustling with people. (Photo by Semicon Japan 2023)

Showing Revival... SEMICON Puts in Full Effort

According to Japanese media such as Asahi Shimbun on the 18th, the number of companies participating in this SEMICON was 961, with 2,265 booths. The number of overseas companies participating was 187, 3.6 times more than last year, and the number of visitors to the exhibition reached 70,000. Japanese media self-praised it as "the largest scale among SEMICON events held in recent years."

Government officials also celebrated SEMICON and asked overseas companies to maintain their interest in Japan. Prime Minister Fumio Kishida sent a video message on the first day of the exhibition, stating, "Japan aims to transform into a growth-oriented economy driven by continuous wage increases and active investment. The driving force behind this is semiconductors," and pledged to continue promoting investment. Economy, Trade and Industry Minister Yasutoshi Nishimura also visited the exhibition venue in person to show support.

Japan Spent a Year of Semiconductors... Attracting Many Overseas Companies

Japan was once a semiconductor powerhouse but has lost that status. To overcome this, Japan literally spent this year as the 'Year of Semiconductors.' To revive semiconductors, Japanese companies joined hands to form an alliance called 'Rapidus,' and the government decided to support it with annual subsidies worth 300 billion yen (2.7 trillion won). Additionally, the government actively attracted overseas companies by offering subsidies for domestic factory construction to accelerate growth. They started paying for tutors to teach semiconductor technology.

As a result, leading companies worldwide such as Taiwan's TSMC and the U.S.'s Micron have begun entering Japan. Currently, Rapidus is located in Hokkaido, Taiwan's PSMC in Miyagi Prefecture, Taiwan's TSMC in Kumamoto Prefecture, and the U.S.'s Micron in Hiroshima, each building semiconductor factories. The entire country of Japan is becoming a semiconductor production base.

The government is fully supporting this effort by preparing a supplementary budget. The supplementary budget passed last month included semiconductor subsidies amounting to 1.545 trillion yen (14 trillion won) under the pretext of supporting factory construction and other activities. In fact, for the Kumamoto TSMC factory, the Japanese government provided 476 billion yen (4.3 trillion won) in construction subsidies, enabling TSMC to shorten the usual five-year construction process to two years. Kumamoto TSMC is scheduled to hold a completion ceremony in February next year.

Japanese Prime Minister Fumio Kishida's congratulatory video message for 'SEMICON Japan 2023'. (Photo by SEMICON Japan 2023)

Government Also Considering Japanese Version of IRA... Success Likely to Continue

The support does not end here. The Japanese government plans to implement a 'Japanese version of the IRA' that provides a tax credit for ten years from the recognition of business plans when semiconductors or electric vehicles (EVs) are produced in Japan. For EVs, a tax benefit of 400,000 yen (3.63 million won) per vehicle will be provided, and for semiconductors, up to 29,000 yen (260,000 won) per wafer, with the final credit amount calculated based on production and sales volume.

The Nihon Keizai Shimbun (Nikkei) reported, "The introduction of the new tax system will make it easier for companies to make large-scale, long-term investments," adding, "In the U.S., automobile manufacturers are already relocating their manufacturing bases to the U.S. due to the IRA."

As Japan prepares various systems to become a 'good country for semiconductors,' the rush of overseas companies to Japan is expected to accelerate from next year. Jensen Huang, CEO of Nvidia, a leading U.S. semiconductor company in AI chips, visited Japan on the 5th and announced plans to establish research and development bases in Japan and support startups, among other initiatives.

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