In the fiscal years between 2021 and 2023, Japan dedicated 3.9 trillion yen in subsidies to support the semiconductor industry, which boomed at the end of the 20th century.
Data presented by the Fiscal System Council, an advisory body to the Minister of Finance, highlights that the Japanese government’s support for the semiconductor industry is significantly more generous than in Western countries.
Semiconductors are integrated into almost all electronic equipment, including household appliances, not to mention computing devices such as smartphones and artificial intelligence (AI) tools. They are also essential for controlling social infrastructure such as railways, electricity and water supply. For this reason, many countries consider semiconductors a strategic item, and have implemented measures to support the industry.
From the perspective of economic security, Japan has allocated approximately 3.9 trillion yen to support the semiconductor industry in the supplementary budgets of the past three years, equivalent to 0.71% of its gross domestic product ( GDP). The main breakdowns are 1,208 trillion yen for Taiwan Semiconductor Manufacturing Corporation (TSMC), the world’s largest semiconductor contract manufacturer, which has built a plant in Kikuyō-chō, Kumamoto Prefecture, and 920 billion yen for Rapidus (Tokyo), whose main objective is to produce new generation semiconductors in the country.
US support for the semiconductor industry is greater than Japan’s in total value, about 7.1 trillion yen over five years, but the proportion of its GDP, 0.21%, is less than a third of that of Japan. Germany’s support is 2.5 trillion yen, or 0.41% of its GDP, showing that the scale of Japan’s support as a percentage of GDP is outstanding.
In 1989, six Japanese general electrical manufacturers, including NEC, Toshiba, Hitachi and Fujitsu, were among the top ten companies in the world ranking of semiconductor sales. However, these companies were losing competitiveness due to the rise of South Korean manufacturers, and from the late 1990s to the 2000s there was a series of withdrawals.
In 1999, NEC and Hitachi’s semiconductor memory businesses merged to form Elpida Memory, which filed for bankruptcy protection in 2012, and in 2003 Renesas Technology (now Renesas Electronics) was formed as a joint venture between Hitachi and Mitsubishi Electric. Several domestic projects aimed at developing cutting-edge semiconductors through public-private equity partnerships were launched in the 2000s, but they failed to restore Japan’s position in the industry.
(Translated into Spanish from the Japanese original. Header image: PIXTA.)
