Japan to Head National Project to Revive Semiconductor Manufacturing

Japan used to be a major player in the production of semiconductors but is now responsible for less than 10% of devices globally. How did Japan rise to fame in the electronics industry, what has the Japanese government announced, and how will it help Japan in the long term?

How did Japan become a major semiconductor manufacturer?

Today, the vast majority of devices come from countries such as China, Taiwan, and South Korea, but in the past, Japan was one of the worlds largest manufacturers of semiconductors at 50% of the world output during the 1980s. The story behind Japanese success in the semiconductor industry is one of the most incredible in the electronics industry (see the documentary on YouTube here). A country that was devastated by WW2 was left with virtually no funds or infrastructure, and yet Japanese perseverance saw Japanese engineers create semiconductors using methods that would leave any semiconductor manufacture gaping. 

A classic example of Japanese ingenuity was when Japan needed to create high-grade germanium crystals. While the Americans had professional melting vats that could precisely melt germanium to separate impurities, the Japanese instead used a leaking bucket connected to a bamboo leaver to slowly pull a heater across a gallium ingot with the resulting crystal being more than acceptable for semiconductors. 

Another example of Japanese ingenuity was the need to carefully control the temperature of melted semiconductor crystals; such crystals have precise melting requirements typically around 1000°C with a temperature range of +-1°C. Again, the Americans were using specialised systems to monitor this temperature, but the Japanese only had analogue readers. To solve this issue, they attached a small mirror to the needle of the meter and reflected light off the mirror which was then cast to a distant wall. The tiny alterations in the needle would create large changes in motion to the light that was cast on the wall.

After developing their first transistors, Japan quickly rose to prominence in the semiconductor industry and quickly became one of the biggest manufacturers of semiconductors. However, after the 1980s, Japans position in the semiconductor industry began to decline as countries such as Taiwan and South Korea took over with more advanced semiconductor devices. The change showed how Japan shifted its focus towards the development of consumer devices and cars instead of creating new semiconductor devices.

Japanese Government Unveils National Semiconductor Project

Despite Japan far behind the advanced semiconductor race, Japan actually has the most semiconductor manufacturing sites in the world with a total of 84 foundries. Although, at the same time, these foundries are not at the forefront of semiconductor technology, they can create consumer electronics for everyday applications. This is important to note as most electronics produced today do not need to use the latest 5nm technology (this technology is generally reserved for the most advanced electronics such as FPGAs and CPUs).

Despite a large number of foundries, Japan accounts for only 10% of semiconductor sales globally, and imports 64% of its semiconductors. The recent pandemic has demonstrated the weaknesses in the semiconductor industry as well as the importance of semiconductors in product supply chains. For example, the automotive industry has been effectively put on hold while consumer products such as GPUs are practically unavailable.

As such, the Japanese government recently announced that it will be treating the revival of the Japanese semiconductor industry as a national project of national importance. The importance of the industry was demonstrated with its comparison to food and energy. Furthermore, it has been noted by the Japanese government that existing semiconductor foundries will be revamped to help produce the latest devices such as those used in processors and 5G networks. However, the government is still to decide which industries and sectors are the most important to focus on (in Japans case, this could be automotive ICs).

Will such an initiative help Japan in the long term?

There is no doubt that such a national project would benefit both the economy and security of Japan. Unlike other government projects and initiatives, the announcement from the Japanese government would utilise pre-existing infrastructure which not only helps with keeping costs down, but also accelerates its implementation. Of course, the cost of equipment in a foundry typically makes up for 75% of the overall cost in a foundry. However, having pre-existing sites that are already geared for semiconductor production massively helps in the logistics of such a project and only equipment needs to be considered.

If Japan identifies the most important sectors accurately, it can greatly defend itself from future market disruptions and global events. For example, if Japan focuses on semiconductors that feed its industry instead of semiconductors important for national security and infrastructure, it could better defend its economy.

The whole world seems to be rushing towards semiconductor sovereignty, and this only makes sense when considering how semiconductors are slowly becoming the beating heart of a nation. From internet services to toaster timers, semiconductors play a vital role in modern life, and will eventually become as important as food itself.