How Japan is Getting Its Chip Mojo Back | Momentum

Japan's Resurgence in the Semiconductor Industry

• Modern comforts such as mobile phones, computers, TVs, cars, trains, and the internet rely on semiconductors, with most being manufactured in Asia, led by Taiwan in advanced semiconductor production (22s).
• Japan is gaining momentum in the semiconductor industry, outspending the US and Germany on chip subsidies in terms of GDP, and making a $67 billion bet to become a global chip powerhouse again (42s).
• Japan previously dominated the chip world in the 80s and early 90s, controlling 50% of global chip sales in 1988, but its economy stagnated and chip technology fell behind after the dot-com bubble burst (1m17s).
• Japan aims to revive its semiconductor industry, mobilizing the government, private sector, academia, and international partners like TSMC and IBM, with billions invested in subsidies and technology (1m49s).
• Advanced chips will serve as the foundation for critical technologies, including artificial intelligence, weapons systems, and electric vehicles, with the semiconductor market projected to be worth $1 trillion by 2030 (2m9s).

Geopolitical Factors and Supply Chain Vulnerabilities

• The global supply chain is vulnerable to geopolitical tensions, with a large portion of production based in Taiwan and South Korea, and China potentially prepared to invade Taiwan by 2027 (2m41s).
• Japan's renewed focus on semiconductors was triggered by disruptions in the supply chain during the COVID-19 pandemic and the Russian invasion of Ukraine, which caused complications in public life and highlighted the importance of semiconductor chips (3m19s).
• Chip security is crucial for Japan's competitiveness, growth, and economy, as key manufacturing industries like cars, game consoles, and robots rely on chips, and recent disruptions rattled the Japanese economy (4m11s).

Japan's Focus on Advanced Semiconductor Technology

• The Japanese car industry, including companies like Toyota, Honda, and Nissan, must meet the challenges of autonomous driving and electrification, which require advanced semiconductor technology (4m20s).
• Japan is not just playing catch-up but also aims to manufacture advanced semiconductor chips, with a focus on developing its semiconductor industrial basis to support user industries and drive economic growth (5m4s).
• Japan is aiming to regain its position in the chip industry with the development of 2-nanometer process technology, which will be used in products like AI-enabled smartphones, computers, and self-driving cars (5m11s).

Collaboration with TSMC and Rapidus

• The country's strategy involves attracting the world leader in semiconductors, TSMC, to its shores, with a joint venture scheduled to begin mass production later this year (5m27s).
• Japan is also betting big on local company Rapidus, a two-year-old company that aims to produce bleeding-edge 2nm chips in 2027 (5m42s).
• Rapidus is crucial for Japan's car industries, which require accessibility to advanced semiconductor technology to realize their business models, such as autonomous driving and electrification (6m11s).
• The success of Rapidus is considered a matter of national security, and the project is critical to the future of the Japanese industry (6m31s).

Preferred Networks: Japan's Answer to Nvidia

• Preferred Networks, a Japanese tech start-up, is also playing a key role in the country's chip industry, producing its own chips optimized for AI and aiming to be Japan's answer to Nvidia (6m59s).
• Founded in 2014, Preferred Networks creates hardware for AI models used in robotics, drug discovery, autonomous driving, and e-commerce, and has secured $463 million in private investment to develop its own semiconductors (7m49s).
• The company is developing a unique processor that consumes less energy, aiming to make AI more sustainable and accessible to more people (8m13s).
• Preferred Networks is confident in bringing its AI chip design and supercomputer to market in a few years' time, but needs an ecosystem of partners, including advanced semiconductor manufacturers in Japan (9m16s).

Future of Japan's Semiconductor Industry

• In the next five years, Japan's semiconductor industry is expected to undergo significant changes, with Rapidus starting to operate and the emergence of generative AI and semiconductor technology creating new opportunities (9m33s).
• Japan's semiconductor industry is expected to be critical over the next 2 to 3 years, as it needs to achieve commercial-grade products to be truly competitive (10m50s).

Regional Impact and the Role of Screen Holdings

• The Japanese semiconductor renaissance is happening in places like Hokkaido and Kyoto, rather than Tokyo, with companies like Screen Holdings designing and building machines that clean chips (11m39s).
• Screen Holdings is optimistic about the Japanese government's plan to revive the semiconductor industry, with funding expected to improve the ecosystem and create new initiatives (12m27s).
• The company sees opportunities in the 2nm challenge and future changes in packaging and circuit design, but also acknowledges challenges such as overseas competition, technological changes, and a lack of skilled workers (12m40s).
• Screen Holdings currently supplies legacy node cleaning technology to customers in China, but is also prepared to cater to demands in Japan when it moves to two-nano chips (13m46s).
• The company expects future demand to come from the production of AI chips, with a shift towards suppliers making less volume and a greater need for small-quantity, high-variety, cutting-edge chips (14m24s).

Competition and Challenges

• Japan faces challenges in competing with the US and China, which have announced billions of dollars in subsidies to grow their semiconductor markets, but companies like Rapidus are determined to take on the challenge (15m5s).
• Rapidus acknowledges that it will be difficult for Japan to compete, but is committed to making the utmost effort to succeed in the semiconductor industry (15m58s).

JASM: A Joint Venture with TSMC, Sony, and Denso

• Japan is focusing on its chip ambitions, with a joint venture called JASM, between Taiwan chip giant TSMC, Sony Semiconductor Solutions, and Denso, playing a key role in this effort, particularly in the town of Kikuyo, Kyushu island (16m13s).
• JASM has completed its first fab and is working on another, aiming to produce advanced chips for smartphones and AI applications (16m36s).
• Sony played a crucial role in bringing TSMC to Japan, providing advice on Japan's methods and sending Sony engineers to support the start-up of TSMC's factory (17m2s).
• Sony hopes its partnership with JASM will benefit its development of image sensors for smartphones and self-driving cars (17m43s).

Impact on the Automotive Industry and Sony's Roadmap

• In five years, it is expected that 35% to 40% of the world's cars will be replaced by electric vehicles (EVs), which will require improvements in logic wafers and image sensing technology (17m59s).
• TSMC is developing a roadmap from 22nm technology to 12nm technology and beyond, which will also benefit Sony's roadmap and lead to lower device power consumption (18m36s).

TSMC's Expansion and its Impact on Kyushu

• TSMC's expansion in Japan is an advantage for the country, attracting many suppliers to Kyushu and stabilizing the supply chain (19m8s).
• The presence of JASM has boosted the economy in Kumamoto, but there are concerns about the long-term viability of turning Kyushu into Japan's own Silicon Valley (19m40s).
• The biggest challenge for Kikuyo town is to welcome people from other countries and create a multicultural environment, which is being addressed through the setup of a Foreign Consultation Desk (20m0s).
• Kikuyo's population is expected to grow with the influx of foreign staff from JASM's two plants, requiring careful management to balance the needs of residents and the company's operations (20m45s).

Kikuyo Town's Development and Challenges

• To address the challenges, Kikuyo town is implementing hardware and software approaches, including securing land and human resources, and collaborating with institutions to train human resources in semiconductor manufacturing (21m20s).
• The key to the success of JASM and Kikuyo town is ensuring that tax revenue is properly distributed to all townspeople and that the town fully accepts JASM and its related people (22m0s).

Japan's Semiconductor Strategy and Key Players

• Semiconductors are a crucial area of focus, with Asia leading the way in fabricating the world's smallest chips (22m28s).
• Japan is implementing an ambitious strategy to attract foreign investment and develop local capabilities, backed by significant funding for research and foundries (22m37s).
• Two key players, JASM and Rapidus, are making progress, with JASM planning to start mass production soon and Rapidus set to open a pilot fab next year (22m49s).
• Japan's efforts to regain its former semiconductor glory, once considered unlikely, are gaining momentum (23m0s).
• The country's progress in semiconductors has answered many questions, but the next cutting-edge technology to make a significant impact remains to be seen (23m19s).