What is behind the scenes of TSMC's expansion into Japan?
October 22, 19:43
TSMC of Taiwan, the world's largest contract manufacturer of semiconductors, has announced a policy to build a new semiconductor factory in Japan.
Actually, it was a project that the Japanese government had been working on to attract under the surface for more than two years.
Why is the country trying to attract foreign companies when there should be a famous semiconductor manufacturer in Japan?
We will explore a little "hard" reality, the sense of crisis of bureaucrats, and the future outlook.
(Reporter Kei Nakazawa / Reporter Shuntaro Hayakawa, Ministry of Economic Affairs)
Dominate the heart of digital devices
The game console "PlayStation 5" released by Sony last year.
High-quality 4K video and quick character movements.
It is said that the speed is overwhelmingly faster than the previous model (PS4).
The semiconductor used at the heart of this game console is made by an American manufacturer called AMD, but it is produced by TSMC in Taiwan.
In addition, we are an advanced technology group that produces a large number of semiconductors used in advanced digital devices such as smartphones and high-performance PCs on consignment from other manufacturers.
Announcement of Japan expansion policy
On October 14, TSMC announced at a press conference that it would build a new semiconductor factory in Japan.
At the press conference, a company executive stated that he "has strong support from customers and the Japanese government."
Unusual mention from the Prime Minister
Prime Minister Kishida, who held a press conference following the dissolution of the House of Representatives that night, mentioned the expansion of this semiconductor manufacturer, which is an individual company, into Japan while appealing for various policies toward the general election.
Prime Minister Kishida
"It is expected that the indispensability and autonomy of Japan's semiconductor industry will improve and contribute significantly to economic security. Support for large-scale private investment totaling 1 trillion yen will be included in economic measures. I want to go
An unusual statement by the Prime Minister.
Behind that, there was a sense of crisis that was close to the impatience of the Japanese government.
Fall from the top of semiconductors
To understand this sense of crisis, we need to look back on the history of semiconductors.
In the past, the Japanese semiconductor industry was a major leader in the world.
In the latter half of the 1980s, Japan's global share was over 50%.
With six Japanese manufacturers in the top 10 shares, the situation was far behind the United States, which ranked second.
At that time, Japan was good at the "vertical integration" model.
It was a method that handles everything from design to production in-house.
However, fabless, which separates design and production, will gradually become the mainstream in the world.
Japanese manufacturers missed the trend of "horizontal division of labor" in which fabless, fab = factory, less = no factory, devoted to design without a factory, and outsourced production to another specialized manufacturer.
Also, in the late 1990s, Japan suffered from a serious financial crisis and economic downturn, making it impossible for manufacturers to make drastic investments in R & D.
Japanese manufacturers rapidly lost their competitiveness in the world without the government's ability to draw a clear semiconductor strategy and without drastic financial support.
In the 2020 ranking, only one Japanese manufacturer is in the top 10.
Although specific fields are strong ...
Japanese manufacturers are still competitive in certain fields.
According to British research firm Omdia, former Toshiba Memory Kioxia is the second largest in the world in the field of "NAND flash memory" used for SD cards for data storage, for example.
In addition, "power semiconductors" that convert electricity into power are used in various industrial machines, and Japanese companies such as Mitsubishi Electric and Fuji Electric occupy a high market share.
However, it is possible to make advanced logic semiconductors (= capable of advanced arithmetic processing) that are indispensable in fields such as AI = artificial intelligence, 5G, data centers and autonomous driving, which are expected to grow rapidly in the future, in Japan. It's gone.
An official of a semiconductor manufacturer self-deprecatedly explained the situation, saying, "Japan is three or four laps behind the world."
"If nothing is done, it will be hollow!"
It was from 2018 to 2019 that the government strongly realized that it would have to strengthen semiconductors even if it invited overseas manufacturers.
The Ministry of Economy, Trade and Industry was nervous about the actions of the Trump administration in the United States.
The United States has strengthened its stance toward China, and in December 2018, Meng, who is considered to be the next top of telecommunications equipment giant Huawei, was arrested in Canada at the request of the US Department of Justice.
In May 2019, then President Trump signed an executive order prohibiting Huawei and others from selling electronic components without the permission of the US government.
Within the Ministry of Economy, Trade and Industry, if these movements accelerate, they are wary of the risk that Japan will not be able to obtain semiconductors from China, which depends on more than 8%.
Furthermore, if tensions between China and Taiwan increase, and if China invades Taiwan by force, semiconductors from Taiwan, which depend on more than 26%, will not be available, and Japanese industry will not be hollowed out. mosquito.
The bureaucrats expressed their feelings in our interview that they felt a strong sense of crisis at this time.
METI officials began contacting TSMC around 2019, calling under the hood to attract factories to Japan.
The reaction was fair.
Taiwanese manufacturers have also expressed interest in building a factory in Japan, and will proceed with negotiations.
In May 2020, the bureaucrat in charge was skeptical of the news that came in.
TSMC has announced that it will build a new production base in Arizona, western United States.
The manufacturer sent a letter to the Ministry of Economy, Trade and Industry refusing to build a factory in Japan, and the person in charge said that he was disappointed.
At that time, the US government had informed the manufacturer that it would provide a subsidy of several hundred billion yen due to the construction cost of the factory.
Demand for cutting-edge semiconductors is expected to continue to grow in the United States, where Google, Apple, and Amazon are located, but it seems unlikely that demand for cutting-edge semiconductors would be that high in Japan.
In the end, "demand + strong government support" were both elements that Japan lacked, and the Trump administration took over the factory project.
I was reminded of the importance of economic security.
It's too early to give up
“If you give up here, the land subsidence of the Japanese semiconductor industry will not stop.” The
bureaucrats sought to invite a process called the post-process, such as cutting semiconductors into chips.
Although the spillover effect on the industry is smaller than that of the front-end process, fortunately, there are still some companies in Japan that are proud of the world's top technology related to the back-end process.
The people in charge took charge of these companies and the TSMC side, and in February, we managed to establish a research and development base at the National Institute of Advanced Industrial Science and Technology in Tsukuba City, Ibaraki Prefecture.
Is there an unexpected tailwind?
Around this time, something unexpected happened in Japan.
With the spread of the new coronavirus, the supply chain has been disrupted and semiconductor shortages have become serious around the world.
With the joint development of the post-process as the entrance, the understanding of attracting TSMC and financial support comparable to that of other countries was shared within politics and the government.
Summarizing the stories of the people concerned, it is said that Germany and Singapore sent autumn waves to TSMC until just before, but it seems that the subsidy of the Japanese government was also one of the deciding factors.
What to make
According to people familiar with the matter, the semiconductor factory will be built in Kikuyo-cho, Kumamoto, with the aim of starting construction next year and starting operations in 2024.
This place is adjacent to the Sony Group's semiconductor factory.
The semiconductors to be produced are not the most advanced.
The circuit line width is from 22 nano to 28 nano.
The smaller the circuit line width and number, the finer the circuit line width and the higher the performance.
Currently, the cutting edge is 5 nano, and 3 nano is coming soon, and 22 to 28 nano is the technology about 10 years ago.
However, it has the advantage that there is a lot of demand at home and abroad.
There is also a need for automobiles, various industrial machines, and for processing the signals of image sensors produced by Sony in Kumamoto Prefecture to improve image quality and image recognition.
It seems that the calm judgment of the manufacturers competing in the world is also working, not sticking to the cutting edge, but attacking the size with volume of demand.
The advantage of being able to supply the semiconductors required for various industries domestically is of great significance from the perspective of economic security.
Kiraboshi maker, stop in Japan
Another meaning of the construction of this semiconductor factory is to make it easier for related parts and equipment manufacturers to remain in the country.
Unfortunately, many Japanese semiconductor manufacturers themselves are "three or four laps behind" in the global competitive environment, but in reality, the silicon base called wafers, which are indispensable for making semiconductors, In the field of semiconductor manufacturing equipment, there are many world-class companies such as Shin-Etsu Chemical, SUMCO, Tokyo Electron and Advantest.
However, these world-leading manufacturers do not only deal with Japanese companies, but also deliver products to manufacturers in the United States, Taiwan, South Korea, and China.
If there is no core semiconductor factory in Japan, there is a risk that such a manufacturer like Kira Hoshi will eventually leave Japan, and from that point of view, the meaning of establishing a large semiconductor factory in Japan is not small.
The challenge is to create digital demand
The Ministry of Economy, Trade and Industry and the Ministry of Finance are currently in discussions on how much the government will subsidize, and the final decision has not yet been set (as of October 22).
The challenge is whether the win-win relationship between TSMC and the Japanese industry with which it will be a business partner will continue.
There is interesting data compiled by Boston Consulting and the American Semiconductor Industry Association.
In the graph showing the ratio of semiconductor consumption = usage by country or region, the United States has 25%, China has 24%, and the EU has 20%, but Japan has only 6%.
If digitization is delayed in Japan and the demand for products that use semiconductors does not increase, even if they are produced in Japan, the semiconductors will become a treasure trove.
It is no wonder that TSMC will export its products overseas if demand does not increase.
It is said that it is important to promote digitalization from the viewpoint of declining birthrate and aging population and labor shortage, but is it possible to rebuild the digital industry, which is a semiconductor user, so as not to cause the hollowing out of the industry? However, I felt that it would be a division that would revitalize Japanese semiconductors and the industry as a whole.
Kei Nakazawa,
Reporter of the
Ministry
of
Economy
, joined the Fukushima Bureau in
2011.
After working at the Fukuoka Bureau, he is
currently
in charge of the
Ministry
of
Economy, Trade and Industry and the
financial industry.
Economy reporter
Shuntaro Hayakawa
2010 joined
Yokohama station Gifu stations
via the Nagoya stations
in the current affiliation
in charge of the Ministry of Economy, Trade and Industry