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Editorial: Reinforce Japan’s industrial infrastructure with TSMC’s expansion into Japan

Taiwan Semiconductor Manufacturing Company (TSMC), which is said to be the “most powerful semiconductor manufacturer in the world,” announced that it will build a new factory in Japan. Construction will start in 2022, and operations are scheduled to begin in 2024. We would like Japan to strengthen the foundation of the domestic semiconductor industry and the digital industry as a whole by taking advantage of the entry of TSMC, a global leader in semiconductor miniaturization technology, into Japan. 


It was the Ministry of Economy, Trade and Industry (METI) who approached TSMC about expanding into Japan. It is notable that METI, which had been insistent on reviving the Japanese semiconductor industry and concentrated its efforts on strengthening domestic companies, made a realistic choice of extending its policy to attract foreign capital.


The Japanese semiconductor industry lags far behind the world’s cutting edge in semiconductor development, and the quickest route to recovery is to invite foreign capital. TSMC will produce “middle range” medium-quality products in Japan. Even so, the planned TSMC products are of much higher quality than those of domestic companies. We hope that the launch of the TSMC factory will be an opportunity for superior technology to take root in Japan.


On the other hand, the huge amount of subsidies that the government is expected to provide TSMC in return for expanding into Japan is a concern. Prime Minister Kishida Fumio said that TSMC’s decision would “significantly contribute to Japan’s economic security,” and that support for TSMC would be included in the government’s additional economic measures.


Semiconductors are an important component in the digital age. There is a serious shortage at the moment. The U.S. and European countries invested a large amount of public funds in the industry to strengthen their semiconductor supply networks, and the Japanese government is following their example. It would be problematic, however, if “economic security” becomes a justification for the government to provide subsidies to businesses and companies with low strategic value.


It is impossible for a single country to produce all products in an industry such as semiconductors, which has a well-developed global division of labor. An excessive tendency to industrial nationalism is harmful and needless. We should also take care to abide by World Trade Organization (WTO) rules.


It is most important for Japan that the new factory will be highly competitive globally and successful as a business. The success of the factory will boost employment and tax revenue, and bring large national economic benefits. If other countries realize that Japan is the right place for semiconductor production, Japan may attract new investment from domestic and foreign companies.


We also hope that Sony Group and Denso, which are expected to be involved in the new factory, will improve their competitiveness in collaboration with TSMC. We hope that the new factory will lead to acceleration of the digital transformation of the entire Japanese economy, through the fusion of superior semiconductor technology with automobiles and industrial machinery, which are Japan’s strengths.

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