In May, the leaders of the G7 met in Hiroshima, Japan, to discuss global challenges such as the war between Russia and Ukraine, the current energy crisis, and the threat of China. One of the critical topics also discussed at the summit, not widely covered in the press, was the threat to Taiwan’s chip manufacturing industry.
Japan is positioning itself as the alternative to Taiwan’s semiconductor industry if China decides to invade the island. The Hsinchu Science Park, 50 miles southwest of Taipei, is home to some of the world’s most valuable assets, the headquarters of Taiwan Semiconductor Manufacturing Company (TSMC), the globe’s most important chip maker.
Taiwan produces over half the world’s chips and 90 percent of the most sophisticated ones. Those are critical for cars, aircraft, laptops, mobile phones, washing machines, missiles, fighter jets, etc. The fastest are now powering the growing artificial intelligence industry.
Access to those chips is necessary for the global industry and the digital economy to thrive. America, and also Europe, and China are dependent on them.
In response to the geopolitical situation, Japan is already ramping up investment in semiconductor manufacturing, research, and development. Increased funding would enable the country to accelerate the growth of cutting-edge technologies, enhancing its competitiveness on the global stage.
Support from Western governments has grown in the face of Beijing’s threat and the wake of the Russian invasion of Ukraine. Western democracies see Taiwan as an essential ally and believe maintaining stability in the Taiwan Strait is crucial to the global economy.
Micron expects to lose a single-digit percentage of its revenues after China alleged the memory chipmaker’s products contained “serious network security risks.”
Micron announced the launch of the U.S.-Japan University Partnership for Workforce Advancement and Research & Development in Semiconductors (UPWARDS) for the Future. Micron’s multiple sites in Japan are central to its research and development roadmap for cutting-edge DRAM technology across its product lines. Micron has invested over $13 billion in Japan since 2013.
Tokyo Electron, a 60-year-old leader in semiconductor manufacturing equipment, has announced that it will participate in UPWARDS.
British officials fear the economic consequences of a conflict in the South China Sea could be catastrophic, crippling supply chains and leading to Covid-style shortages of vital imports.
The “Hiroshima Accord” envisages the countries working together to protect supply chains if China invades Taiwan. They will begin a “semiconductor partnership” to bolster technological supply chain resilience. The accord includes plans to improve the supply chain for the components vital for automobiles, defense technology, and many modern consumer products.
Japan could strengthen its position by forging strategic partnerships and collaborations with other countries. Building alliances with semiconductor equipment manufacturers, raw material suppliers, and other nations with complementary expertise would bolster Japan’s semiconductor industry. Collaborative efforts would enhance technological advancements, facilitate knowledge sharing, and create a diverse and robust supply chain.
Furthermore, Japan has extended expertise in semiconductor lithography technology, with companies such as Nikon and Tokyo Electron producing high-end lithography machines. While they don’t possess ASML’s EUV (extreme ultraviolet) technology, they can supply 10nm and above patterns. The U.S., Japan, and the Netherlands recently agreed to a ban on providing their high-end photolithography equipment to Chinese companies.
Nikon’s NSR-S635e Lithography machine Source: Nikon
Japan would need to invest significantly in research and development. The country has a track record of investing in cutting-edge technologies, and this approach would be vital to develop advanced chip manufacturing processes. Japan’s focus on R&D would lead to breakthroughs in nanotechnology, advanced lithography, and materials science, ensuring its competitiveness in the global semiconductor market.
The Japanese government’s support is crucial. Policies encouraging innovation, such as tax incentives, research grants, and streamlined regulations, would attract investment and talent.
Japan’s existing technological expertise, infrastructure, and potential for increased investment, coupled with international collaboration and the diversification of supply chains, could pave the way for its rise as the chip-making king.
Japan is positioning itself as the alternative to Taiwan’s semiconductor industry if China decides to invade the island. The Hsinchu Science Park, 50 miles southwest of Taipei, is home to some of the world’s most valuable assets, the headquarters of Taiwan Semiconductor Manufacturing Company (TSMC), the globe’s most important chip maker.
Taiwan produces over half the world’s chips and 90 percent of the most sophisticated ones. Those are critical for cars, aircraft, laptops, mobile phones, washing machines, missiles, fighter jets, etc. The fastest are now powering the growing artificial intelligence industry.
Access to those chips is necessary for the global industry and the digital economy to thrive. America, and also Europe, and China are dependent on them.
In response to the geopolitical situation, Japan is already ramping up investment in semiconductor manufacturing, research, and development. Increased funding would enable the country to accelerate the growth of cutting-edge technologies, enhancing its competitiveness on the global stage.
Unease about China & Taiwan
“The most threatening Chinese attack against Taiwan may be psychological. Since the Ukraine war began, Taiwanese media have been flooded with conspiracy theories and Chinese propaganda stirring mistrust of America,” writes Henry Zeffman, associate political editor of The Times. “NATO-backed Russia into a corner, it is often claimed and is sacrificing Ukraine for American interests. Taiwan must beware of America pushing it to be the next Ukraine. Such stories are surprisingly widespread in Taiwan.”Support from Western governments has grown in the face of Beijing’s threat and the wake of the Russian invasion of Ukraine. Western democracies see Taiwan as an essential ally and believe maintaining stability in the Taiwan Strait is crucial to the global economy.
China retaliates against America
The Cyberspace Administration of China banned its big infrastructure operators from buying the memory chips of America’s Micron Technology. It is retaliating against expansive sector controls introduced by the U.S. last year.Micron expects to lose a single-digit percentage of its revenues after China alleged the memory chipmaker’s products contained “serious network security risks.”
Micron announced the launch of the U.S.-Japan University Partnership for Workforce Advancement and Research & Development in Semiconductors (UPWARDS) for the Future. Micron’s multiple sites in Japan are central to its research and development roadmap for cutting-edge DRAM technology across its product lines. Micron has invested over $13 billion in Japan since 2013.
Tokyo Electron, a 60-year-old leader in semiconductor manufacturing equipment, has announced that it will participate in UPWARDS.
The UK-Taiwan Hiroshima accord
During his first G7 summit, U.K. prime minister Rishi Sunak met with Fumio Kishida, his Japanese counterpart, to talk about “protecting peace and security in the Indo-Pacific” amid escalating concerns about Beijing’s saber-rattling.British officials fear the economic consequences of a conflict in the South China Sea could be catastrophic, crippling supply chains and leading to Covid-style shortages of vital imports.
The “Hiroshima Accord” envisages the countries working together to protect supply chains if China invades Taiwan. They will begin a “semiconductor partnership” to bolster technological supply chain resilience. The accord includes plans to improve the supply chain for the components vital for automobiles, defense technology, and many modern consumer products.
Japan could strengthen its position by forging strategic partnerships and collaborations with other countries. Building alliances with semiconductor equipment manufacturers, raw material suppliers, and other nations with complementary expertise would bolster Japan’s semiconductor industry. Collaborative efforts would enhance technological advancements, facilitate knowledge sharing, and create a diverse and robust supply chain.
Japan’s technological prowess
With its history of technological innovation, Japan has the potential to capitalize on the void left by Taiwan’s absence in the semiconductor market. The country has a robust semiconductor industry, with established companies such as Renesas Electronics, Sony, and Toshiba. Japan’s expertise in precision manufacturing, materials science, and chip design positions it as a strong contender to take over semiconductor production.Furthermore, Japan has extended expertise in semiconductor lithography technology, with companies such as Nikon and Tokyo Electron producing high-end lithography machines. While they don’t possess ASML’s EUV (extreme ultraviolet) technology, they can supply 10nm and above patterns. The U.S., Japan, and the Netherlands recently agreed to a ban on providing their high-end photolithography equipment to Chinese companies.
Nikon’s NSR-S635e Lithography machine Source: Nikon
Japan would need to invest significantly in research and development. The country has a track record of investing in cutting-edge technologies, and this approach would be vital to develop advanced chip manufacturing processes. Japan’s focus on R&D would lead to breakthroughs in nanotechnology, advanced lithography, and materials science, ensuring its competitiveness in the global semiconductor market.
Japan can become the new global chipmaker
China’s hypothetical invasion of Taiwan would undoubtedly have significant consequences for the global semiconductor industry, causing disruptions in the supply chain and raising concerns over national security and intellectual property protection. However, this situation also presents an opportunity for Japan to emerge as a leading player in the chip-making industry.The Japanese government’s support is crucial. Policies encouraging innovation, such as tax incentives, research grants, and streamlined regulations, would attract investment and talent.
Japan’s existing technological expertise, infrastructure, and potential for increased investment, coupled with international collaboration and the diversification of supply chains, could pave the way for its rise as the chip-making king.
