Japan is poised to sharply raise its chip-gear spending in an attempt to boost its position in the global semiconductor market, as it tightens exports amid a US-led push to limit China’s tech ambitions.
Japan is expected to spend $7 billion on fab equipment next year, which would mark an 82 percent jump from this year—the largest in the world—according to data from SEMI, a global association of chipmaking equipment producers. That compares with a 2 percent increase forecast for China and the total amount would be higher than the combined spending of the Europe and Mideast markets.
While Taiwan remains the largest spender—$24.9 billion expected in 2024—on chip-fabrication equipment, Japan’s aggressive investment complements a US push to reconfigure global chip supply routes and sources.
Japan has long been a leading producer of equipment and materials necessary to make chips, and is now leveraging its position to woo major chipmakers such as Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co.
It’s also tightening its grip on crucial equipment. Tokyo said last week it would expand curbs on shipments of 23 types of cutting-edge chipmaking tools, including extreme ultraviolet mask-testers, immersion lithography machines and silicon-wafer cleaners.
Japan’s goals include developing next-generation chips, such as solar panels used to harvest clean energy, which would galvanize its tech industry and economy, according to Yeon Wonho, a supply chain analyst at the Korea Institute for International Economic Policy.
“Japan wants a breakthrough with chips,” Yeon said. “It wants to team up with countries like the US for joint research while attracting manufacturing facilities to its soil.”
China remains a major market for Japan, and the government denies its export controls target any particular nation. But the latest moves could restrict China’s access to advanced chipmaking technology, and Beijing has said such curbs threaten the stability of the global supply chain.
On Sunday, China’s Foreign Minister Qin Gang urged Japan to refrain from supporting US efforts to suppress the Chinese semiconductor industry. Qin also said a blockade will only strengthen Beijing’s resolve to achieve self-reliance in chips, according to a Foreign Ministry statement.
His Japanese counterpart, Yoshimasa Hayashi, in turn pressed for the return of a citizen detained in China. A Japanese man was detained in March for violating local law, according to media reports, although details are still unknown.
While Tokyo and Beijing seek to keep their relations stable, Japan has been a major ally in US efforts to keep China from advancing in key technology fronts like quantum computing, wireless networks and artificial intelligence.
The US contributes 39 percent of the total value of the global semiconductor supply chain while its allies and partners from Japan to Germany account for another 53 percent, according to a 2021 report from the Center for Security and Emerging Technology, a Georgetown University think tank. China holds about 6 percent but is quickly developing its abilities across supply chains, it said.
Japan’s growing tensions with China contrast with a recent thaw in its relations with South Korea, another American ally. Japan last month ended its curbs on exports of chip materials to South Korea after a summit meeting, which marked some progress in overcoming historical and economic conflicts.
South Korean public approval for President Yoon Suk Yeol, however, dropped after his visit to Tokyo, highlighting the political risk of restoring ties with an economically key country that’s still regarded by many with resentment due to colonial and wartime history.
Japan was a leading semiconductor seller until the 1980s when it began to cede much of its market to Taiwan, South Korea and China. It now specializes heavily in supplies such as wafers—thin slices of material on which microcircuits are built—and other essential chipmaking gear. Bloomberg News