Japan is continuing the trend of tech nationalism with an effort to push its domestic semiconductor ecosystem forward into a bright future. Japan plans to spend approximately $65 billion on stimulating its semiconductor ecosystem. Their hope is that $65 billion will be accompanied by private investment as well.
Japan has announced a new plan to revitalize the country’s semiconductor and artificial intelligence industries as it works to regain its chip leadership.
The proposal will provide support worth 10 trillion yen ($65 billion) or more by fiscal 2030, Prime Minister Shigeru Ishiba said earlier this week.
“We will formulate a new assistance framework to attract more than 50 trillion yen in public and private investment over the next 10 years,” Ishiba said, adding it would be part of broader “revitalization” efforts in Japan.
The plan will be part of a comprehensive economic package to be finalized in November and will be financed through subsidies, government institution investments and debt guarantees, according to local media.
The move comes amid broader efforts by Japan to bolster and diversify its semiconductor supply chain, with the government aiming to triple sales of domestically produced chips to more than 15 trillion yen by 2030.
I doubt Japan will be as successful as they want to be… I doubt it because China is a major customer of Japanese semiconductor ecosystem companies and that cannot continue. The United States is pushing for Japan to drop China as a customer for some products, which exactly I’m not sure yet.
But regardless, Japan is set to lose revenue even if it doesn’t comply with the will of the United States because China is planning on building at least one fab for chips that Japanese firms supply today.
So there’s a double whammy right off the bat. Restrictions and lower revenue. There’s another issue though, talent. Japan’s workforce is rapidly aging and it’s unclear Japan has the workforce and the knowledge base to increase the size of its semiconductor ecosystem.
Even with government incentives to get kiddos into the education channel needed to produce more semiconductor literate employees you will most likely have trouble getting the numbers. Contrast this to Vietnam with its own desire to increase its semiconductor ecosystem and its young and seemingly willing workforce.
Rapidus is in essence Japan’s semiconductor national champion, with plans to be making 2nm logic chips by 2027… which is absurdly soon for a company that is only just getting its footing. Rapidus was only formed in 2022 and is a collaboration of 8 companies. Which is interesting because this kind of multi company collaboration has historic precedent in Japan. Many of the companies you might know from Japan have networks of related collaborative companies. So maybe with a little Japanese willpower Rapidus could become something great. I’m not sure honestly.
But uh… here’s a problem nobody wants to talk about. Is it even wise to build semiconductor facilities on an island that sits directly on the ring of fire? Earthquakes are frequent in Japan, tsunamis are possible, so why the heck would you build fabs which cost 10’s of billion of dollars on that island? It is a serious and possibly fatal risk.
It’s a similar issue to Taiwan in that it is not wise to have semiconductor ecosystems there. Taiwan is an island prone to earthquakes and with a death sentence hanging over its head. China will absolutely re-absorb Taiwan and the world’s supply of semiconductors will be cut.
Japan should look to the United States for its semiconductor industry. Japanese fabs and suppliers will be welcomed, geopolitical risk will be minimized, and the serious risk of earthquakes damaging the worlds supply of semiconductors and semiconductor inputs would be diminished.
The tech nationalism of the world is deepening and that’s a good thing. Just the fact that we’re going to have a more diversified supply of semiconductors means it’s good for all of us.