Japanese Prime Minister Fumio Kishida’s ambitious ￥4 trillion (US$26.64 billion) spending spree to revive the nation’s semiconductor industry also aims to help reorient the economy back to a positive growth cycle sought by the government and central bank.
Already there is anecdotal evidence emerging from the northern island of Hokkaido and from Kumamoto in the south that the new chip projects are starting to impact the local economies and stem the tide of people flocking to Tokyo for better jobs and schooling.
Yuto Oikawa, a realtor in Chitose, Hokkaido, cannot keep up with calls as the city transforms from a backwater to one of the nation’s hottest real-estate markets thanks to the construction of a ￥2 trillion semiconductor foundry subsidized by Kishida’s chip plan.
Photo: Bloomberg
“We are completely short-handed,” said Oikawa, 32. “It’s blown me away.”
The foundry is part of government-backed Rapidus Corp’s plan to make a giant leap in chip technology and re-establish Japan at the forefront of semiconductor expertise.
Kishida calls chips “a driving force” to help lead Japan out of its deflationary malaise of sluggish growth once and for all. A boost to wages is seen as critical to the Bank of Japan scrapping its negative interest rate, as is widely expected next month or in April, and to further increases after that.
“I hope the chip industry will take a lead on pay hikes in regional economies,” Kishida said in a video message at a chip expo in December last year. “The Japanese government will continue to give its full support to investment in the mass production of chips in our country.”
The hope is that the latest chip strategy would help fill an economic void left by the legions of companies that shifted production abroad when the yen was about twice its current strength more than a decade ago. That hollowing out of industry drained communities of spending power and employment opportunities, prompting many young people to leave.
Yet success is not guaranteed. The 2012 bankruptcy of Elpida Memory, a government-backed maker of DRAM memory chips, shows that an initial interventionist hand from the public sector can still end in failure.
Dai-Ichi Life Research Institute executive economist Hideo Kumano said that the global competitiveness of the chip industry means the latest strategy is far from certain of success.
“These subsidies are massive, but as fiscal stimulus measures, it’s possible they don’t end up paying off in the long run,” Kumano said.
The wave of people heading to the cities has resulted in four key urban areas surrounding Tokyo, Nagoya, Osaka and Fukuoka accounting for about 54 percent of Japan’s population and 60 percent of national output. From 2000 to 2020, the number of people living in Tokyo rose 16 percent, while the national population shrank.
The combined number of residents in Hokkaido and Kumamoto fell 7.7 percent during that period, while the size of their combined regional economies contracted 2.9 percent. The cheap yen has invited a wave of tourists to Japan, helping bring money into regions with sightseeing hotspots, but more needs to be done for areas off the beaten track.
The main goal of the Japanese government’s chip strategy is to triple domestic chip sales to about ￥15 trillion by 2030 and regain ground lost to Taiwanese and South Korean rivals.
The government’s spending spree to fund projects across Japan has already attracted foreign companies, such as the world’s biggest chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
The Taiwanese giant has two factory projects in Kumamoto and there is talk of another to come. Kishida has highlighted the impact on the local community, as TSMC bumps starting salaries 20 percent above the national Japanese average.
The plant would generate an overall economic impact of ￥7 trillion and more than 10,000 jobs, Kyushu Financial Group Inc said, with an even bigger boost expected from the second TSMC foundry.
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS