AUGUST 2023
Japan Seeks to Revitalize Its
Semiconductor Industry
Sujai Shivakumar, Charles Wessner, and Thomas Howell
Japan is adopting major new industrial policies with the objective of restoring the international
competitiveness of its semiconductor industry. At the end of the 1980s, the industry accounted
for over 50 percent of world production—a gure that had fallen to 9 percent by 2022. Today, the
Japanese industry lags behind the global technological leaders by an estimated 10 years. Reecting
policymakers’ sense of urgency and concern, Japan has put aside practices that characterized its
industrial policy throughout much of the postwar era, including limits on foreign investment and an
aversion to allowing major foreign-owned manufacturing facilities to operate in Japan.
Today, collaborations with foreign partners are seen as imperative. On May 4, 2022, at the rst meeting
of the bilateral Japan-U.S. Commercial and Industrial Partnership ( JUCIP), the parties agreed on “Basic
Principles on Semiconductor Cooperation,” which outlined a vision for collaborating on objectives and
strategies for establishing a more resilient semiconductor supply chain. Then, at the U.S.-Japan summit
held on May 23 that same year, a joint task force for developing next-generation semiconductors
was launched to implement the Basic Principles. At a meeting of the U.S.-Japan Economic Policy
Committee in July 2022, the two countries agreed to pursue joint research and development (R&D)
in key technologies, and Japan announced the formation of a public research organization patterned
on the U.S. National Semiconductor Technoloy Center (NSTC) called the Leading-Edge Semiconductor
Technoloy Center (LSTC).
A New Paradigm
While similar-sounding U.S.-Japan accords have been announced over the preceding decades in many
sectors—often with little subsequent practical impact—the Economic Policy Committee agreement
was concluded against the backdrop of an increasingly assertive China and the recent economic
shocks arising out of the Covid-19 pandemic and the disruption of chip supply chains.
Indeed, both governments are approaching their vulnerabilities in semiconductors as a matter of
