Visual China infographic
From the smartphones in our pockets to the data centers that power the internet, to the artificial intelligence algorithms, semiconductors are indispensable. The rapid digital transformation has driven a surge in demand for semiconductors and made it the focus of technology wrestling in various countries. The United States passed the Chip and Science Act last year, and the European Union passed the draft EU Chip Act in January this year, increasing local subsidies and strengthening export controls has become a trend. At the same time, East Asia, as one of the semiconductor manufacturing centers, is also increasing its efforts.
Recently, the South Korean government announced that it will attract 300 trillion won of private investment to build the world's largest semiconductor cluster in the metropolitan area. Japan's Ministry of Economy, Trade and Industry also announced that by 2030, the total sales of domestic semiconductor and related component material manufacturers will strive to reach three times the current level, about 15 trillion yen (about 776 billion yuan).
South Korea and Japan are now members of the "CHIP4" alliance (CHIP4) promoted by the United States, and the three countries have an indescribable relationship in the history of semiconductor development, especially Japan, which has experienced twists and turns. In the 80s of last century, Japan's semiconductor manufacturing industry was brilliant for a while, and after being suppressed by the United States for crowding the US market, it entered a trough, and South Korean companies took advantage of this opportunity to turn around. Today, Japan is working hand in hand with the United States in the semiconductor field. "Working with the United States in the field of semiconductors, I feel the strangeness of fate." In May last year, Japan's then Minister of Economy, Trade and Industry, Koichi Hagiuda, spoke out during a visit to the United States.
A TSMC plant under construction in Kumamoto Prefecture, Japan.
The past three decades have been regarded as the "lost thirty years" of Japanese semiconductors, and the country's intention to make a comeback is on the horizon, announcing last year that it will jointly invest 1.3 trillion yen with the United States for the joint development of next-generation semiconductors, and eight major Japanese companies, including SoftBank, Sony, and Toyota, have jointly invested in Rapidus to create cutting-edge semiconductors. Taiwan Semiconductor Manufacturing Corporation (TSMC) is also building a plant in Kumamoto Prefecture.
"In the past, Japan lagged behind in reviving the semiconductor industry, and next-generation semiconductor projects are the last chance to make up for it." Japanese Prime Minister Fumio Kishida said in the House of Councillors in March. Times have changed, and the road for the Japanese semiconductor industry to seek to return to the top is not smooth.
"The biggest and last chance"
"Semiconductor technology is at a structural inflection point, and this is a huge opportunity." Yohei Ogino, an adviser to Japan's Ministry of Economy, Trade and Industry and director of the semiconductor strategy office, said in an interview in February that now is the "biggest and last opportunity" for Japan because the semiconductor industry no longer simply follows Moore's Law, which doubles the number of transistors that can be accommodated on semiconductor integrated circuits.
The Japanese government's systematic layout in the semiconductor industry in recent years began in March 2021, when the Ministry of Economy, Trade and Industry established the "Semiconductor and Digital Industry Strategy Research Council", instructing "three steps" - restoring semiconductor production capacity, promoting the development of next-generation semiconductors, and "laying the foundation" for future technologies. An important part of the first step is the introduction of TSMC. The Japanese government provided subsidies totaling about 476 billion yen and invited TSMC to build a semiconductor plant in Kumamoto Prefecture.
It is rare for the Japanese government to subsidize an overseas company with a large grant. The Ministry of Economy, Trade and Industry explained that the introduction of TSMC will contribute to stable procurement of semiconductors and promote the research and development of cutting-edge semiconductors. Sony has also invested in the construction of a new Kumamoto factory with TSMC, and the type of chips planned to be produced is a cutting-edge technology in Japan, which TSMC has mastered as early as 10 years ago. However, this could become the basis for building a supply chain for pure electric vehicles (EVs) in Japan's Kyushu region. In the past, Kyushu was once known as Japan's "Silicon Valley", and in the 80s it gathered a large number of semiconductor industries, and now hopes that TSMC will revitalize it.
Kumamoto's new plant, which will open in December 2024 and is expected to employ 1,700 people, is a top priority for Japan's current semiconductor landscape. According to statistics from the Ministry of Economy, Trade and Industry, the number of employees of semiconductor manufacturers exceeded 190,000 in 1998, but in 2020 this number fell by 70% to 80,000 due to the weakening of the industry. The Kyushu Semiconductor Talent Development Alliance, an industry-university-government organization led by the Japanese government, predicts that in the next 10 years, there will be a talent gap of about 1,000 people in the Kyushu region every year.
IC photo infographic
In Japan, where the birthrate is declining and aging is increasing, the number and proportion of the working population continue to decline, and high-tech talents are becoming more scarce. Japanese media pointed out that due to the explosive growth of the semiconductor industry, the global demand for talents in Europe and the United States, the trend of attracting high-skilled human resources with high salaries is obvious, and the problem faced by Japanese companies is that in the case of a sharp depreciation of the yen, the cost of hiring talents with high salaries has increased significantly, or will lag behind in the competition for talents.
Japan's Ministry of Economy, Trade and Industry led the establishment of the "Advanced Semiconductor Technology Center (LSTC) of the Technology Research Portfolio" in November last year, and then Toyota Motor, Sony, NTT, NEC, SoftBank and other eight large companies established a joint venture Rapidus, which plans to mass-produce 2-nanometer chips per day as early as 2025, hoping to replicate the myth of "Hinomaru Semiconductor" in the past.
On March 8, 2012, local time, the Japanese memory giant Elpida (Elpida) factory located in Hiroshima Prefecture, Japan. IC photo infographic
At the end of the 90s of last century, led by the Ministry of International Trade and Industry of Japan, NEC and Hitachi Manufacturing respectively spun off their businesses and unified to establish the only DRAM manufacturer in Japan - Elpida Corporation, which once held nearly 20% of the global DRAM field, because of the escort of government funds and policies, it was branded as "Made in Japan", also known as "Hinomaru Semiconductor". After an early period of significant expansion, Elpida experienced overcapacity, and then encountered the 2008 financial crisis, and the Japanese government supported it vigorously, but it was still unable to recover and went bankrupt.
After 20 years, the Japanese government has once again allocated large amounts of money to build the domestic semiconductor industry, and Kishida Fumio once said of semiconductor policy in his policy speech: "In this field, we will gather public and private sector investment, and we need to increase by 10 trillion yen in 10 years." "Nikkei Shimbun" analysis said that the current huge support of various governments affects the ups and downs of the industry, and Japan's semiconductor industry has ushered in a situation where politics controls its destiny.
At present, one of the main support of the Japanese government is to promote the completion and commissioning of Rapidus in Hokkaido. According to Reuters, the Japanese government finalized plans for an additional 300 billion yen on April 10 after subsidizing Rapidus by 70 billion yen. Rapidus Chairman Tetsuro Tojo said the company will need 7 trillion yen in funding to begin mass production of advanced logic chips in 2027. Some analysts have pointed out that how to raise such a large amount of funds is regarded as a problem, and it is not easy for eight companies to form a unified management idea, and it is difficult to form a situation dominated by one or two companies, because except for Mitsubishi UFJ Bank, the other seven companies have invested the same amount.
Rapidus, which started late, aims to mass-produce 2-nanometer chips, which refers to the linewidth of semiconductors, and the smaller the linewidth, the more powerful the performance, and there are only a handful of companies that have mastered the mass production technology of "3-nanometer" chips. As the leading enterprises in this field, Intel, Samsung, and TSMC are sprinting towards "2 nanometers". Therefore, many people have raised doubts about Rapidus' ambitions.
From self-reliance to a focus on foreign aid
Since Japan's semiconductor industry relatively lacks the technology necessary to mass-produce cutting-edge products, foreign cooperation is crucial. Tetsuro Higashi said, "In the past, the United States hindered the development of Japan's semiconductor industry, but now it is a good opportunity to revitalize with the support of the United States. ”
"Both Japan and the United States share the belief that economic and security are inseparable." At the Japan-U.S. "Economic 2+2" meeting in July 2022, U.S. Secretary of State Antony Blinken said the two countries are leading the building of a "rules-based economic order." In the joint statement, the two parties proposed four action plans, including strengthening the supply chain and protecting cutting-edge technologies, and will establish a joint R&D center for advanced semiconductors.
Chen Youjun, a researcher at the Institute of World Economics of the Shanghai Institute of International Studies, told The Paper (www.thepaper.cn) that the current cooperation between Japan and the United States is a technology exchange type cooperation, not the so-called "US domination, Japan dependence", but the reorganization and integration of their respective advantages, and finally form a monopoly technological advantage.
Following a partnership between the governments of Japan and the United States, Rapidus and IBM announced a partnership in November 2022. IBM retired from semiconductor production in 2015 and does not currently have its own manufacturing facility, but research and development has not been interrupted, and in May last year it announced the successful manufacture of chips on the 2nm process in the lab. IBM needed to expand production outsourcing and Rapidus needed quick access to advanced process technology. However, this does not mean that the mass production of next-generation semiconductors can be achieved, and the introduction of extreme ultraviolet lithography machines (EUV lithography machines) is essential, and currently only the Dutch company ASML can produce EUV lithography machines in the world.
Lithography machine was originally a field that Japanese companies are good at, in the 80s of last century, a monopoly position was formed in the field of lithography machines, especially Nikon once monopolized more than 50% of the industry, and then Canon also entered the lithography machine. According to a report by Gartner, a US IT market research and consulting firm, in the mid-90s, Nikon and Canon accounted for 70% to 75% of the global market share. Born in 1984, the Dutch company ASML came out on top, carefully sourcing component assembly lithography machines from suppliers around the world. The US Consumer News and Business Channel (CNBC) pointed out that thanks to the investment and external technical cooperation of Samsung, TSMC, Intel, and the establishment of exclusive procurement relationships with hundreds of suppliers, ASML has been able to make great progress in the field of EUV lithography machines.
In contrast, Japanese companies like Nikon are more inclined to self-sufficiency in R&D and device components, with high development costs and relatively slow speeds, which is regarded as one of the main reasons for the failure of Japanese companies to get involved in EUV lithography machines, and is actually related to the strategy of the Japanese government. Koichi Hagita, Japan's former minister of economy, industry, said at a meeting of the House of Representatives last year that the Japanese semiconductor industry had the world's highest sales in the 80s, but its competitiveness continued to decline in the next 30 years because the government could not see global industrial trends and did not implement appropriate policies.
The demand for EUV lithography machines needs to be solved urgently, and the Kishida government has its eyes on overseas. Late last year, Rapidus signed a memorandum of understanding with the Belgian Research Center for Microelectronics (IMEC), and in March this year the two companies agreed to collaborate on the development of cutting-edge lithography machine technology, including EUV lithography machines. IMEC, an independent research institute for semiconductor manufacturing, has been working closely with ASML for about 30 years to upgrade EUV lithography machines and develop next-generation High-NA (High Numerical Aperture) EUV lithography machines. For Japan, it is hoped that IMEC will inject its core technical strength.
The Japanese government led the development of the semiconductor industry in the 80s of last century, which is a self-reliant development model, basically without external technical assistance, but Japan now realizes that its own capabilities are not enough, so it emphasizes external technical support. Chen Youjun said that in terms of overall strategic direction, Japan will focus on the semiconductor industry, because it lost to China in 5G technology and will seek to surpass China in 6G strategy, which is inseparable from the development of semiconductors.
Chen Youjun also pointed out that in the past, the international market was mainly Europe and the United States, but now compared with the original regional market, it is actually a global market, especially like China and some developing countries, which can provide market resources to support the development of the semiconductor industry.
However, Japan chose to closely follow the United States in introducing export control measures for semiconductor equipment at a critical moment in industrial development, isolating it from some markets.
There are "flexible" regulations
On January 13, 2023, local time, in Washington, D.C., United States, US President Joe Biden (right) and Japanese Prime Minister Fumio Kishida held talks at the White House in Washington. Visual China infographic
In October last year, the Biden administration of the United States introduced restrictions on semiconductor exports to China, and the Kishida government has been vague about this when the United States urges linkage. In January, Fumio Kishida and Biden held talks in Washington, and Reuters said that the United States hopes to persuade Japan to join the ranks of restricting semiconductor exports to China, which is also one of the important contents of the summit meeting. After the meeting, Kishida said Japan would "responsibly" consider how it handles semiconductor trade.
After more than three months, Japan announced on March 31 that it would revise the Foreign Exchange and Foreign Trade Law to implement export controls on 23 types of semiconductor manufacturing equipment, and is soliciting public comments on the relevant measures, which will be implemented in July. Japanese Minister of Economy, Trade and Industry Yasuminoru Nishimura said at a press conference, "This is not consistent with the measures introduced by the United States in October last year, and it is not specific to specific countries." "Overall, the impact on Japanese companies is limited."
The scope of control is the categories required for the "front process" (manufacturing process responsible for forming circuits, etc.) in semiconductor manufacturing. The fact is that in addition to 42 countries and regions such as friendly countries, the export of regulated semiconductor manufacturing equipment to other countries and regions requires a license, and China is also among the required licenses, and China is the largest export destination for Japanese semiconductor manufacturing equipment.
Chinese Foreign Ministry spokesman Mao Ning said at a regular press conference on April 3 that Japan announced that it will strengthen export controls on high-performance semiconductor manufacturing equipment, and the outside world generally believes that this move is intended to artificially restrict normal semiconductor industry cooperation between China and Japan. The Chinese side has solemnly made representations to the Japanese side at different levels in this regard, expressing strong dissatisfaction and serious concerns.
Chen Zilei, a professor at the Shanghai University of International Business and Economics, told The Paper that it is expected that the degree and scope of restrictions on control policies are flexible, and there is more room for maneuver, and how this card is played is affected by multiple factors such as China-Japan relations and Sino-US relations. In any case, the Japanese government needs to ensure that regulatory powers remain in its hands. Originally, Japan sought to replace the United States in the semiconductor industry, but now the interests of the United States and Japan are the same, Japan as a whole will follow the United States to suppress and block Chinese semiconductors, and this irrational decision has not paid much attention to the impact on the economy, trade, industry, employment, economic welfare and so on.
According to the Japan Semiconductor Manufacturing Equipment Association, overseas sales of Japanese semiconductor manufacturing equipment in fiscal 2021 were approximately 3.443 trillion yen, of which one-third went to China, ranking first among exporters. The Nikkei newspaper said that if export controls to China are implemented, half of the current sales of semiconductor manufacturing equipment to China may be affected. For Tokyo Electronics, Chinese manufacturers are one of its biggest customers, and the impact of the regulation cannot be ignored. When asked about this, Tokyo Electronics, Japan's largest semiconductor manufacturing equipment manufacturer, told The Paper that "from the company's standpoint, it does not comment on policy decisions between countries." A number of semiconductor manufacturing equipment manufacturers did not respond.
Although Japan's Ministry of Economy, Trade and Industry has solicited opinions on regulatory measures, few Japanese semiconductor equipment manufacturers have publicly expressed their opinions. Chen Zilei believes that Japan's economic circles are not expected to oppose it as loudly as in the past, and must give priority to obeying the US "anti-China containment" strategy. Whether it is the United States or Japan, in the past few decades, governments have delegated power and profit, with multinational companies as the main driving force of economic globalization to invest and trade, driving the industrial chain, and now the authority has gradually been recycled into the hands of the US and Japanese governments, which will have a great impact on the economic vitality of relevant countries.
In the field of semiconductors, international competition is inevitable, all parties want to get rid of each other's dependence, but no country can establish a semiconductor supply chain alone, complete autonomy is not overnight, how to cooperate with other countries around the world is still an important issue.