Japan, once a dominant force in the global semiconductor market, has begun efforts to revive its chip industry, driven by large-scale government support and the attraction of foreign companies. The country is attempting to restore its competitiveness by drawing global semiconductor firms from the United States and Taiwan as production bases, while also pursuing the development of next-generation artificial intelligence (AI) chips. However, analysts say it remains uncertain whether Japan can overcome the structural limitations of a weakened design ecosystem and insufficient competitiveness in cutting-edge processes.
According to foreign media including Bloomberg and Nikkei on Tuesday, U.S. chipmaker Micron held a groundbreaking ceremony on Sunday for an expansion project involving a 1.5 trillion yen (about 14.2 trillion won) investment in its plant in Hiroshima, Japan.
The Japanese government has been making concerted efforts to attract production facilities of foreign semiconductor companies. As chip supply chains emerge as a strategic industry directly linked to national security, moves to secure production bases domestically are spreading worldwide, and Japan is actively inducing investment from global companies with large-scale subsidies.
Micron, the U.S. memory chipmaker, is a representative example. Japan's Ministry of Economy, Trade and Industry decided to provide 500 billion yen (4.7569 trillion won) of Micron's 1.5 trillion yen investment cost. This is seen as demonstrating Japan's determination to go beyond simply waiting for foreign companies' investment and to attract production facilities domestically by injecting massive fiscal resources.
Cooperation between Micron and Japan has continued for more than a decade. Micron secured a production base in Japan by acquiring Elpida, a Japanese DRAM maker facing management difficulties, in 2013. Since then, it has continued memory chip production by utilizing Japan's production infrastructure and technical workforce, and this investment is also interpreted as further strengthening this cooperative relationship.
Japan has also succeeded in attracting production facilities of Taiwan's TSMC, the world's largest foundry company. The TSMC plant built in Kumamoto Prefecture is expected to play an important role in stabilizing the supply chain for Japan's auto industry and industrial semiconductors.
Japan still maintains world-class competitiveness in the semiconductor materials and equipment sectors, but has lost much of its global leadership in the memory and system semiconductor sectors. Accordingly, it is pursuing a strategy to supplement its lacking production capabilities and strengthen its supply chain through cooperation with foreign companies.
Moves to secure next-generation chip technology are also getting into full swing. Japan's SoftBank is pursuing "ZAM," a next-generation AI memory chip development project, together with U.S. firm Intel and Japan's Fujitsu. This project aims to develop new memory technology to replace or complement high-bandwidth memory (HBM), which has become the core memory in the current AI chip market. The move reflects the judgment that securing next-generation memory technology first will become the key to future semiconductor industry competitiveness, as the importance of memory performance grows amid the rapid expansion of AI data centers and the spread of generative AI services.
The Japanese government is also actively supporting research and development and the construction of production facilities through its growth strategy industry investment plan. It is defining semiconductors as a key strategic industry not only for economic growth but also for securing national security and industrial competitiveness, and expanding public-private cooperation.
However, few forecasts predict that the revival of Japan's semiconductor industry will be smooth. Above all, the industry points to the significant weakening of Japan's chip design capabilities as the biggest problem.
The semiconductor industry is an ecosystem industry in which various sectors including materials, equipment, design, production and packaging are organically connected. Japan still has world-class competitiveness in silicon wafers, photoresists and semiconductor manufacturing equipment. However, the system semiconductor design and fabless sectors have shrunk significantly compared to the past. Some assess that the ecosystem has reached the level of collapse.
For this reason, it is pointed out that Japan cannot fundamentally recover its industrial competitiveness merely by attracting foreign companies' production facilities. Even if production facilities are established in Japan, if a structure is maintained in which overseas headquarters handle core design and technology development, it will be difficult to lead to the strengthening of Japanese companies' independent technological competitiveness.
Limitations in production processes are also raised. Japan's production base has a relative strength in mature processes (legacy processes) such as automotive and industrial semiconductors. While mature processes see steady demand in automobiles, industrial equipment and home appliances, competition in the AI chip and high-performance server chip markets centers on cutting-edge fine processes such as 2-nanometer and 3-nanometer.
Recently, the global semiconductor industry has seen fiercer competition to secure cutting-edge processes amid the expansion of the AI market. With companies possessing advanced processes leading the global market, whether Japan can move beyond its mature-process-centered competitiveness to secure advanced processes is expected to be the key task in rebuilding its semiconductor industry going forward.
