Reviving Japan's Semiconductor Industry Faces Numerous Challenges.
According to Japanese media reports, the revival of Japan's semiconductor industry is facing a shortfall of 40 trillion yen (approximately 197.3 billion yuan), with the report focusing on the challenges faced by the country's semiconductor development. Following the Liberal Democratic Party presidential election at the end of September, the country will usher in a new prime minister. The report suggests that the next Japanese prime minister needs to possess the leadership capabilities to achieve the revival of semiconductors.
The article states that currently, countries around the world are entering an era of vigorously supporting semiconductors. Competition is underway between China, the United States, and Europe in terms of providing substantial government funding. Japan, which once fell behind in the semiconductor vanguard, has also proposed a revival strategy. Cooperation between politics, government, and businesses aims to achieve the domestic production of the most advanced logic (computational) semiconductors, leading to the establishment of Rapidus. For Japanese semiconductors to survive in international competition, politics, government, and businesses must work together in unity.
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At present, the exterior construction of the factory being built in Chitose City, Hokkaido, is set to be completed in October, and equipment will begin to be transported in. For the factory to start production in April 2025, Rapidus needs to raise approximately 10 trillion yen for equipment purchases and other expenses. Rapidus is expected to raise about 100 billion yen from contributing companies as early as 2024 and has outlined a vision to fill the funding gap through bank loans and support from the Japanese government. However, whether the fundraising plan can proceed as expected remains unpredictable.
A senior executive from a company investing in Rapidus stated that it is impossible to invest tens of billions of yen at a stage where the performance of the prototypes and the prospects for customer development are unclear. An official from Japan's Ministry of Economy, Trade and Industry said, "Without private sector funding participation, it will be difficult to provide support." The Japanese media reported that Rapidus's financing negotiations have fallen into a dilemma similar to the chicken or the egg conundrum, reflecting Japan's lack of a leader who can guide the government and businesses to jointly advance the revival of semiconductors.
The report indicates that after receiving government support, Rapidus has finally begun factory construction. However, it is only at the starting point in achieving the goal of mass-producing the most cutting-edge semiconductors and reaching sales of 10 trillion yen by the 2030s. It is estimated that the funds needed for mass production, in addition to the previously raised 10 trillion yen, total 40 trillion yen.
Professor Suzuki Kazuto from the Graduate School of Public Policy at the University of Tokyo analyzed, "The cohesion of the current government has decreased, and there are more and more people who are skeptical about supporting Rapidus," and pointed out that "It is crucial for the next government to reaffirm its commitment to semiconductors for the success of Rapidus."
Three Stages of Revival for Japan's Semiconductor Industry
Last year, Japan's Ministry of Economy, Trade and Industry released the revised "Semiconductor and Digital Industry Strategy." The document, by reviewing the implementation status since its release in 2021 and the current global macro environment, has established a clearer development path for key industries such as semiconductors, information processing, and advanced information and communication technologies.Semiconductors are the cornerstone of future technological development and a significant core of the strategic report. It is evident from the "Semiconductor Digital Strategy" that Japan, on one hand, is intensifying its research and development efforts to achieve breakthroughs in cutting-edge semiconductor manufacturing, emphasizing "to maintain Japan's relative advantage in the global semiconductor industry chain, such as silicon wafers and resist coatings in semiconductor materials," and on the other hand, it specifically mentions "semiconductor manufacturing equipment and production materials are indispensable in semiconductor manufacturing," highlighting their strategic and economic security importance.
The Ministry of Economy, Trade and Industry of Japan divides the revival of Japan's semiconductor industry by 2030 into three stages:
(1) Accelerate the construction of semiconductor production infrastructure. From an economic security perspective, Japan needs to first ensure the stable supply of advanced process semiconductors. Considering the cost and feasibility of self-development, Japan no longer insists on a self-sufficient semiconductor production strategy, but instead attracts foreign chip manufacturers to build factories in Japan through subsidies.
(2) Collaborate with the United States to develop the next generation of semiconductor technology. The National Institute of Advanced Industrial Science and Technology (AIST) of Japan has already launched a research and development alliance to develop manufacturing processes below 2nm with investments from Intel and IBM, expecting initial results around 2025.
(3) Build on existing technology to develop disruptive semiconductor technology. The lack of digital investment is one of the core reasons for Japan's long-term economic growth weakness, which is also a core pain point that the new digital industry plan needs to address. At the same time, the goal of digital transformation is to create additional value on a large scale, rather than reducing operating costs. To date, 80% of Japanese companies' IT budgets are still mainly used for business maintenance and reducing operating costs.
Looking ahead, the road to Japan's technological recovery is not smooth. On one hand, in terms of the global economic operating environment, some of Japan's policies have ignored basic market principles, and this approach that prioritizes economic security over market efficiency will undoubtedly come at a great cost; on the other hand, there is a significant uncertainty behind the scientific research results of huge investments. If the research direction is wrong or other countries break through key nodes first, the huge investments may be wasted.