Japan's quest for the most powerful microchip leads semiconductor revival
Aug 6, 2024
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Fei Xue, a senior analyst at The Economist Intelligence Unit, dives into Japan's semiconductor landscape, reflecting on its past dominance in the 1980s. She discusses the country's ambitious plans for a revival, focusing on innovation, international partnerships, and reducing dependency on foreign suppliers. Interesting insights emerge on the evolving roles of traditional tech giants like Canon and Sony in this renaissance, and the critical role of semiconductors in shaping contemporary technology. Xue provides a snapshot of the geopolitical stakes involved in securing chip supply chains.
Japan aims to revitalize its semiconductor industry by collaborating with global leaders like IBM and TSMC to advance technology.
The country's strategy includes focusing on niche markets and developing two-nanometer semiconductors to regain competitive strength in geopolitics.
Deep dives
The Significance of Semiconductors
Semiconductors are essential components found in a wide range of products, from consumer electronics to smart devices and even athletic shoes. They primarily consist of logic chips, which perform processing tasks, and memory chips, which store data. As globalization increases, the demand for semiconductors grows, as they facilitate enhanced connectivity and functionality across various technologies. Their critical role in advancing emerging technologies like artificial intelligence highlights the need for a robust semiconductor industry.
Japan's Semiconductor History and Shift
In the late 1980s, Japan was a dominant force in the semiconductor market, accounting for over half of global production due to innovations like electron beam lithography technology. However, geopolitical factors such as tariffs imposed by the U.S. and a focus on specialization led to Japan's rapid decline in market share in the 1990s. Today, a significant portion of Japan's semiconductor production relies on specialty and legacy chips rather than leading-edge technology, marking a shift in the global landscape. Consequently, Japan now seeks to revitalize its semiconductor industry through collaboration and investment.
Revitalization Efforts and Global Competition
Japan is pursuing a comprehensive strategy to revive its semiconductor sector, including collaboration with international companies like IBM and TSMC to establish advanced manufacturing facilities. The Rapidus consortium aims to develop two-nanometer semiconductors by 2027, albeit while facing competition from companies like TSMC and Samsung who are already advancing towards one-nanometer technology. Japan’s approach includes focusing on niche areas, such as precision chip-making tools and materials, to bolster its competitive edge. To meet domestic demand and national security concerns, these efforts reflect Japan's recognition of the geopolitical implications in the semiconductor supply chain.
Back in the 1980s, Japan occupied more than half of the global semiconductor market. Since then, however, other countries have led the way, as they scramble to secure their chip supply chains. CNBC's Arjun Kharpal and Tom Chitty are joined by Fei Xue, senior analyst at The Economist Intelligence Unit, to discuss how Japan's government are planning to revitalise their semiconductor industry and its quest to develop the world’s most advanced microchip.