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Sony and other Japan chipmakers to spend $30bn in production race

Wednesday, July 10, 2024

Major Japanese semiconductor makers including Sony Group and Mitsubishi Electric are planning around 5 trillion yen ($31 billion) in capital investments through 2029, as they move to boost production of power devices and image sensors.

Nikkei compiled capital investment plans for the fiscal 2021 to fiscal 2029 period by Japan's eight major chipmakers: Sony Group, Mitsubishi Electric, Rohm, Toshiba, Kioxia Holdings, Renesas Electronics, Rapidus and Fuji Electric.

Seeking to revive the domestic chip industry, they will increase investments in power semiconductors, sensors and logic chips, all considered core technologies in growth fields such as artificial intelligence, decarbonization and electric vehicles.

Capital investment in the communications equipment sector, including semiconductor manufacturing, increased 30% over five years to 2.1 trillion yen in fiscal 2022, according to a Ministry of Finance survey.

Chipmakers' share of overall manufacturing investment rose from 11% to 13% over the same period, becoming the third largest spender after transportation machinery -- which includes automobiles -- at 15% and chemicals at 14%.

The company set up a new facility at its site in Nagasaki prefecture in fiscal 2023 and announced plans to build a new plant in Kumamoto prefecture, both on the southernmost main island of Kyushu.

With an eye on expanding markets for AI data centers and EVs, investments in power devices that control electricity have picked up pace, with Toshiba and Rohm investing about 380 billion yen in total.

Toshiba will increase production of silicon power devices at a factory in central Japan's Ishikawa prefecture, while Rohm will increase production of energy-efficient silicon carbide power devices at a factory in Miyazaki prefecture in Kyushu.

Mitsubishi Electric will increase its production capacity of silicon carbide power devices 5-fold in fiscal 2026 compared to fiscal 2022. It plans to invest approximately 100 billion yen in a new facility building in Kumamoto prefecture. "We will set up a structure that can compete with industry giant Germany's Infineon Technologies," said President and CEO Kei Uruma.

In 1988, Japan held 50% of the world's semiconductor market share, but from the 1990s on, South Korean and Taiwanese companies invested heavily with the support of their governments to take the lead. Having lost out in the investment race, Japanese players withdrew one after another from cutting-edge technology development in the early 2000s, resulting in a market share in 2017 of below 10%.

In around 2020, as U.S.-China tensions heightened, the Japanese government designated semiconductors as a critical material for economic security. Coronavirus pandemic supply chain disruptions intensified the need to secure domestic production capacity for the chips that determine the competitiveness of a country's digital industry.

In logic semiconductors for AI, Rapidus aims to produce cutting-edge 2-nanometer products. A prototype line will be operational by April 2025 in Chitose on the northernmost main island of Hokkaido.

The Japanese government has decided to provide as much as 920 billion of the total 2 trillion yen required in investments for the project, which will include research and development costs. Rapidus plans to move to mass production in 2027 and may increase capital investments in the future.

The Ministry of Economy, Trade and Industry has set a goal of increasing sales of domestically produced semiconductors, including those made by foreign companies like Taiwan Semiconductor Manufacturing Co., to over 15 trillion yen by 2030, triple the amount in 2020.

The government earmarked 3.9 trillion yen for subsidies from fiscal 2021 to fiscal 2023, with 3 trillion yen going toward major chip companies both in Japan and overseas. The 3.9 trillion yen figure is the largest among developed countries in terms of its percentage of gross domestic product.

Of the 5 trillion yen in investments currently planned, the government will subsidize about 1.5 trillion yen.

The market share of semiconductor manufacturers headquartered in Japan in 2023 was 8.68% in terms of sales, up 0.03 points from 2022, marking the first increase in seven years, according to British research company Omdia.

"With the largest investments in their history, Japanese companies' semiconductor production will continue to grow after 2024, and their share will continue to recover," said Akira Minamikawa, a senior analyst at Omdia.

By: DocMemory
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