Japan should provide tax incentives in the next fiscal year and stimulate investment of 10 trillion yen ($88 billion) over the next 10 years to revive the country's chip manufacturing industry, a senior adviser to the government's semiconductor committee said, foreign media reported.
Tetsuro Higashi, a senior chip adviser to the prime minister and former chief executive of Tokyo Electron, said the supplementary spending of about $7 billion approved by the Japanese government this week should be just the beginning of Japan's efforts to reverse decades of decline in the chip industry.
"I expect the Japanese government will continue to invest on a similar scale for at least the next few years," Higashi said Dec. 20. "Without initial government investment, no private company will be willing to invest. The government will play a central role until the chip industry reinvigorates." Mr Higashi called on the Government and private sector to invest Y10, 000bn over the next decade to revitalise Japan's chip industry. Fumio Kishida, Prime minister, is understood to have said Japan's public and private sectors would invest more than Y1,400bn in domestic semiconductor production.
A shortage of chips has disrupted global manufacturing during the coronavirus pandemic, prompting governments to start supporting their own chip production and supply. The United States will pump $52 billion into its chip industry and entice TSMC and Samsung Electronics to build new chip plants in the United States. China has made the semiconductor industry a key pillar of its development goals. TSMC and Samsung have set investment levels very high, spending hundreds of billions of dollars over the next few years to improve and expand chip capacity.
For years, Japan underinvested in the chip industry and lost market share to rivals in other regions. This year, Japan made revitalizing the chip industry a national project, with the goal of roughly quadrupling the annual revenue of domestic semiconductor companies to Y13, 000bn by 2030.
TSMC recently announced it would invest $7bn to build a plant in western Japan, with the government pledging to fund half the cost of the plant, marking a departure from Japan's previous reliance on domestic companies. Akira Amari, a senior member of Japan's Liberal Democratic Party, said earlier that the partnership with TSMC is seen as key to boosting Japan's chip production capacity in the coming years.
Support measures such as exempting chipmakers from corporate income tax for research and development expenses, as well as cutting taxes and utility costs for chipmakers, are also worth considering, Higashi said.
Higashi said it will take Japan a decade or so to reach the cutting edge of contemporary chip manufacturing, a goal that will determine the fate of many aspects of the Japanese economy, from autonomous driving to health care. In the next decade, he hopes to see the mass production of 2 - and 3-nanometer chips in Japan.
"Unless Japan secures the foundation of its chip industry, we will have to rely on other countries for chip intellectual property, and other countries will take all the added value of the chip industry," Higashi said. All industries need to be aware of this possibility."
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