Tokyo pouring money into chip-making capacity in ‘last chance’ move to catch up with TSMC, Samsung, and Intel
By SCOTT FOSTER
Japan’s Ministry of Economy, Trade and Industry (METI) has announced plans to establish a design and manufacturing base for next-generation semiconductors in order to ensure the competitiveness of Japanese industry and reduce the risk of dependence on Taiwan.
The effort will target advanced logic integrated circuit (IC) production at 2 nanometers (2nm) by 2027. METI’s basic strategy for the revival of Japan’s semiconductor industry is:
Step 1: Urgent reinforcement of semiconductor production base for IoT [the Internet of Things].
Step 2: Develop next-generation semiconductor technology infrastructure through Japan-US collaboration.
Step 3: Future technology infrastructure through global collaboration, including the realization of future technologies such as optoelectronic convergence.
All of this comes in the context of an estimated doubling in value of the addressable market in the decade to 2030. That market ranges from PCs, smartphones and internet-connected consumer electronics to electric vehicles, smart factories and smart cities, artificial intelligence and quantum computing.
METI regards this as Japan’s “last chance” to catch up with TSMC, Samsung, Intel and IBM in the field of advanced logic ICs.
Specifically, the Taiwanese, South Koreans and Americans have moved from Planar-FET (45nm to 28nm) to FinFET (22nm to 5nm) and are now working on Gate-All-Around (GAA) (3nm to 2nm and beyond) chip architecture while Japanese logic device makers such as Renesas have lagged.
Japan is not uniformly behind the curve. It has a significant presence in memory ICs and is a leader in image sensors and silicon carbide power devices; its production equipment and materials such as silicon wafers and photoresists are essential to the industry.
But its weakness in advanced logic and dependence on TSMC make it as vulnerable as the US to a potential disruption of chip supplies from Taiwan, including in a potential China invasion scenario.
To lead the project, METI has announced the establishment of a Leading-edge Semiconductor Technology Center to conduct R&D and a company called Rapidus to put the upshots into practice. Both will receive government subsidies.
As first announced during US President Biden’s visit to Tokyo last May and elaborated upon in July, when US Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo met with Japan’s Minister for Foreign Affairs Yoshimasa Hayashi and Minister of Economy, Trade and Industry Koichi Hagiuda in Washington, DC, the R&D effort will involve close bilateral collaboration.
Participants include the University of Tokyo, Japan’s National Institute of Advanced Industrial Science and Technology (AIST) and science research institute Riken, America’s National Semiconductor Technology Center, representatives of Japan’s semiconductor industry and IBM. Europe’s Interuniversity Microelectronics Institute, or imec, will also partake.
Intel, which is pursuing 2nm technology with IBM, should be a major beneficiary. Japanese makers of semiconductor production equipment and materials count Intel as one of their largest and most important customers and have a strong interest in helping it catch up with Samsung and TSMC.
Rapidus is a joint venture with eight shareholders: Kioxia, Sony, Softbank, Toyota Motor, Denso, NTT, NEC and Mitsubishi UFJ Bank. Kioxia is a leading producer of NAND flash memory and Sony is the world’s top producer of image sensors.
Denso makes components, including semiconductors, for the Toyota group. NTT is Japan’s leading telecom carrier while NEC is its largest telecom equipment maker. Mitsubishi UFJ is Japan’s largest bank. Other companies may join the group later.
Rapidus is led by chairman Tetsuro “Terry” Higashi, the former chairman, president and CEO of Tokyo Electron and director emeritus of SEMI, the international semiconductor equipment and materials industry association, and President Atsuyoshi Koike, former president of Western Digital Japan and senior vice president for technology and fab operations with responsibility for Western Digital’s joint venture with Kioxia.
TSMC and Samsung plan to start mass production using 2nm process technology in 2025. Rapidus is aiming for 2027. If all goes according to plan, Japan will join Taiwan, South Korea and the US as a provider of leading-edge foundry services by the end of the decade.
Like China, Japan has embarked on a long march to bring its semiconductor manufacturing technology to the industry’s leading edge. But Japan is part of a cooperative international ecosystem while US-sanctioned China must try to go it alone.
Meanwhile, another attempt is being made to build an IC foundry industry in Japan.
Last August, ON Semiconductor (onsemi) of the US announced that it was considering the sale of its factory in Niigata, Japan. On November 1, Tokyo-based Mercuria Investment announced that it and its advisors, Sangyo Sosei Advisory and Fukuoka Capital Partners, had reached an agreement to buy the facility.
Mercuria’s top shareholders include the Development Bank of Japan, trading company Itochu and Sumitomo Mitsui Trust Bank.
Onsemi Niigata – to be renamed JS Foundry – produces analog and power devices for the auto industry. According to the Japanese press, its experienced staff will be retained and its facilities upgraded, with the total cost of the acquisition and subsequent improvements exceeding 20 billion yen ($144 million).
JS Foundry will provide contract manufacturing services to customers in the electric vehicle, renewable energy and other industries.
The agreement provides for an orderly transfer of production for onsemi to the American company’s recently expanded manufacturing facility in Aizu-Wakamatsu and elsewhere in its global network. Onsemi is rationalizing, not abandoning, its operations in Japan.
Mercuria reportedly plans to buy other factories in order to address the shortage of semiconductor foundry capacity in Japan. There are many potential candidates with dozens of older facilities in need of modernization. If this is the start of a trend, as seems apparent, financial investors could become a new engine of industrial growth in Japan.
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