Japan's Chip Strategy: A Game of Technological Security and Massive Investment

Japan's Chip Strategy: A Game of Technological Security and Massive InvestmentAs the global chip war intensifies, even Japan has begun to make aggressive moves, planning to build chip factories on its own soil. This maneuver has sparked widespread attention, drawing scrutiny to the underlying motives behind it

Japan's Chip Strategy: A Game of Technological Security and Massive Investment

As the global chip war intensifies, even Japan has begun to make aggressive moves, planning to build chip factories on its own soil. This maneuver has sparked widespread attention, drawing scrutiny to the underlying motives behind it. What role does technological security play in this game besides enormous subsidies and investments?

Japan's Emphasis on Chip Strategy

In recent years, the US has been encouraging domestic companies to expand their chip production capacity and actively engaging foreign companies, including TSMC, in this endeavor. Japan previously extended an invitation to TSMC, hoping it would establish a chip factory within its borders. To incentivize this move, Japanese authorities allocated over 100 billion yen in subsidies. Concurrently, Sony and Kioxia are planning to jointly invest 1 trillion yen in constructing a new factory.

These measures are driven by considerations beyond mere economic interests; they stem from concerns about technological security. Currently, only a handful of leading chip manufacturers, such as TSMC and Samsung, hold the key technologies within the entire Asian region. To ensure its own technological security, Japan has had to take steps to attract more chip giants to its shores.

Technological Innovation and Investment Clash

Beyond setting up new factories, Japan has also increased its investments in technological innovation. In March this year, Sony announced a 220 billion yen investment in its Tsukuba plant to build a new research and development center, primarily focused on image sensors and logic chips. These projects are slated to commence in 2024, coinciding with the planned construction of new factories.

From a technological standpoint, the most anticipated advancement is the commercial production of 3-nanometer technology. According to Samsung's plans, it will begin mass production of 3-nanometer chips at its Austin, Texas, factory in 2024, investing $17 billion and hiring thousands of employees for this endeavor.

Southeast Asia's Low-Cost Advantage

From a technology transfer perspective, Southeast Asia appears to hold an advantage. Vietnam and Malaysia, with their relatively low labor and land costs, have already attracted substantial investments from chip companies. The most significant example is Intel's construction of a chip assembly and testing factory in Hai Phong, Vietnam, with an investment of $1.5 billion.

However, Southeast Asia still faces numerous bottlenecks in terms of technology and infrastructure, making it difficult to achieve significant breakthroughs in the short term.

The Ambition of the US Chip Strategy

TSMC seems to favor expanding production in the US. Early this year, the company announced a $40 billion investment to build four super-advanced wafer fabs in Arizona. The scale of this investment and the ambitious plans for domestic expansion in the US are unprecedented. TSMC has stated that this endeavor will mark its greatest technological innovation in a century.

Intensification of Global Chip Competition

Starting in 2024, the chip industry is entering a period of unprecedented competition, with governments around the world increasing their investments and subsidies. Notably, the European Commission has launched its "Chips Act", which aims to increase the EU's global chip production capacity to 20% by 2030, dedicating nearly 7 billion in subsidies to companies such as Intel.

Future Challenges and Opportunities

While Southeast Asia has attracted substantial investments, it still faces significant bottlenecks in technology and infrastructure. Therefore, Samsung and TSMC remain the industry leaders; however, changes in the future landscape could occur at any moment. Both risks and opportunities need to be carefully considered by all stakeholders.

Japan's chip strategy is one of its tactics to address global competition; however, the future evolution of the market landscape remains uncertain and hinges on the strategic maneuvers of all players involved.

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