Memory chips by South Korean semiconductor supplier SK Hynix
are seen on a circuit board of a computer in this illustration picture taken
February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo
Japan's efforts to rebuild its semiconductor industry are
getting a shot in the arm as more and more Taiwanese chip companies expand here
- not only to support a new TSMC 2330.TW plant but also excited about the
Japanese sector's prospects.
The influx comes amid shifting alliances and priorities in
the global chip industry as the United States pushes to limit China's progress
in cutting-edge semiconductors and strengthen partnerships between its allies.
Fabless chipmaker Alchip Technologies 3661.TW, which
specialises in customised chips known as application-specific integrated chips
(ASICs), is illustrative of the China decoupling trend.
In 2022, the bulk of its research and development engineers
were based in China but Alchip has begun moving roles overseas, many to Japan,
said a source who was briefed on the matter.
The company said it is hiring in Japan, North America and
Taiwan but declined to comment further on personnel matters.
"We're expecting Japan semiconductor market growth,
we're continuously capitalising on Japan ASIC opportunities and already
engaging in several good projects," said Hiroyuki Furuzono, general
manager of Alchip Japan.
At least nine Taiwanese chip firms have set up shop or
expanded operations in Japan over the past two years, according to a Reuters
count.
Chip design company eMemory Technology 3529.TWO, for
example, opened an office two years ago in Yokohama, which neighbours Tokyo,
and has 11 employees after hiring from Japan conglomerates which once dominated
the industry.
"After we built the office there we are receiving more
frequent communication with the customers and they are more willing to talk in
Japanese with our local people, so we see business is booming," eMemory
President Michael Ho told Reuters.
More Taiwanese chip sector firms are also looking at
increasing their presence or making their first foray into Japan, said the
source and another person with knowledge of the matter, adding that a weak yen
has made such decisions easier.
The sources declined to be identified as the information was
not public.
PROACTIVE SUPPORT
While Japan still boasts leading semiconductor material and
equipment makers, it has seen its share of the global chip manufacturing market
shrink to 10% from around 50% in the 1980s after trade tensions with the U.S.
and competition from South Korean and Taiwanese rivals.
But in recent years Japan has thrown huge sums to rebuild
its chip manufacturing sector, recognising that semiconductors are vital for
economic security and spurred on by the global chip shortage during the
pandemic as well as encouragement from Washington.
This Saturday, TSMC, formally known as Taiwan Semiconductor
Manufacturing Co, will hold the opening ceremony for its first plant on the
southern island of Kyushu, a chipmaking hub.
The on-track plan contrasts with the troubled construction
of TSMC's Arizona factory. It has also just announced plans for a second fab in
Japan, bringing total investment in the venture to more than $20 billion.
The chipmaking giant, Reuters has reported, sees Japan as a
natural fit in terms of an industrious work culture and a government that is
easy to deal with and generous with subsidies.
"The core strength of a strong semiconductor country
lies not just in leading firms but in a robust ecosystem," said Nori
Chiou, investment director at White Oak Capital.
"Japan's proactive government support, marked by
substantial subsidies and minimal political interference, sets it apart,
fostering superior progress compared to many other countries."
In addition to TSMC, the Japanese government-backed chip
foundry venture Rapidus plans to mass produce chips on the northern island of
Hokkaido from 2027. Taiwan's Powerchip 6770.TW is also seeking government
subsidies to set up a $5.4 billion foundry in Japan.
Taiwanese firms boosting their presence in Japan include
TSMC-backed Global Unichip Corp (GUC) 3443.TW, another fabless designer of
ASICs, which said it is attracted by both the engineering talent and business
opportunities.
Additionally, Materials Analysis Technology (MA-tek)
3587.TWO, which inspects semiconductor materials and cites TSMC as its biggest
client, opened a new lab in Kyushu late last year. Semiconductor equipment and
maintenance firm Finesse Technology 7704.TWO, another key TSMC contractor, is
building a factory in Japan.
TSMC supplier Marketech 6196.TW is also expanding in Japan,
the sources said. Marketech declined to comment.
"The trend will continue for the foreseeable future as
part of decoupling," said Takamoto Suzuki, head of China economic research
for trading house Marubeni. He warned, however, that Japan may not have
sufficient young science industry workers to meet demand.
The number of workers in Japan's chip-related businesses has
declined by around a fifth over the last roughly two decades, although the
government and universities have ramped up efforts to encourage students into
the field.