Japan and US to Build a Chip Supply Chain

Japan US semiconductorFlags of Japan and the United States of America. Source: Adobe Stock

Japan and the US plan to build a semiconductor supply chain to reduce the current dependence and risk of chip production in certain regions with details to be discussed in a summit when Japanese Prime Minister Yoshihide Suga and U.S. President Joe Biden meet on April 16 in Washington, according to Nikkei Asia.

Both countries have been grappling with the shortage of automotive chips which is eroding the automobile industries. Japan is the world’s third-largest automotive producing industry. It serves as a major pillar to the country’s economy. 

The automotive industry also takes a lion’s share of the US economy and supports 4.5 percent of all jobs in the US.

The two leaders will work on forming a strategic alliance in building a semiconductor supply chain aiming to reduce dependence on China that has deepened conflicts with the US as well as the geopolitically risky Taiwan. 

In a report by Boston Consulting Group, the US share of global semiconductor manufacturing capacity declined from 37 percent in 1990 to a mere 12 percent in 2020, while 75 percent is now clustered in East Asia. Additionally, it is projected that China will contribute an additional 40 percent of new manufacturing capacity in the next decade, making it the largest chip-making location in the world.

Biden administration has nodded to a US$50 billion subsidy to nurture the semiconductor production industry of the US.

The leading chip-maker, TSMC has invested US$12 billion to set up a 12-inch chip foundry in Arizona for 5nm chip production last year and more recently set up a packaging and testing research and development center for 3DIC materials in Tsukuba, Japan, as a response to the current tensions.



Source: Nikkei Asia, BCG, CTEE