Japan to invest $500m in new advanced chip venture
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The Japanese government has announced its support for a new semiconductor company led by tech firms including Sony Group Corp and NEC Corp.
Japan is looking to re-establish itself as a lead maker of advanced semiconductors, with the creation of a new venture.
The country's government has revealed it will invest up to ¥70bn (£427m) in Rapidus, a new semiconductor company led by tech firms including Sony Group Corp and NEC Corp. The company is expected to begin manufacturing in the second half of the decade.
“Semiconductors are going to be a critical component for the development of new leading-edge technologies such as AI, digital industries and in healthcare,” Yasutoshi Nishimura, Japan's Minister of Economy, Trade and Industry, said at a news briefing.
The announcement comes in the midst of a global semiconductor shortage, and a trade conflict between China and the United States that has led US President Joe Biden to impose strict measures to restrict Beijing’s access to advanced semiconductor technology.
The new chip company represents the next phase in Japan’s semiconductor strategy and is a further indication of its deepening co-operation in technology development with the United States after the two countries in July agreed to establish a new joint research centre to develop faster and more power-efficient next-generation 2 nanometre semiconductors.
Rapidus will include investment from firms such as Nippon Telegraph and Telephone Corp as well as Kioxia Holdings, TV Tokyo reported on Thursday. It added that the Japanese government would set up a new research centre by the end of 2022 to develop sub-2-nanometre semiconductors.
Since the shortage began in 2020, the economic losses caused by the lack of semiconductors can be measured in billions of dollars.
Over the past two years, the shortage of chips has forced Ford, Jaguar Land Rover, Volkswagen, General Motors, Nissan, Daimler, BMW, Renault and Toyota to shut factories, scale back production and exclude high-end features such as integrated satellite navigation systems, which rely on sophisticated semiconductor technology, from new vehicles.
The US has restricted China’s access to semiconductor tech since at least 2019 when the Trump administration banned Huawei from buying vital US technology. Last summer, the US also prohibited the export of four technologies tied to semiconductor manufacturing, on the basis that they are “vital to national security,” and signed a “historic” bill aimed at boosting domestic production of semiconductors.
In light of the shortages and trade conflicts, Japan could be concerned that China may attempt to take control of Taiwan, the global hub for advanced chip production, in order to increase its supply of semiconductors.
With a view to boosting its own domestic chip production, Japan’s government has also offered financial aid to encourage foreign chip makers to build plants in Japan, including ¥400bn yen to help Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading maker of logic chips, build a plant in Kumamoto prefecture that will supply semiconductors to Sony and autopart maker Denso Corp.
In July, Japan also offered a ¥93bn subsidy to help memory chip makers Kioxia Corp and Western Digital Corp expand output in Japan. In September it pledged to give U.S. chipmaker Micron Technology ¥46.5bn so it can add production capacity at its plant in Hiroshima.
In the cover story of the latest issue of E&T, Chris Edwards looks at what happened with semiconductors, why, whether it could have been avoided, and what’s happening now. Is it the end of offshoring?
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