There was once a time when semiconductors were a "build it and they will come" business. But now, as geopolitical risk and economic-security concerns mount, Japan is beginning a serious shift from mere manufacturing capacity toward the power to share information and connect the chain. A new challenge to oversee the entire supply chain is underway.

The Background to Semiconductor Supply-Chain Resilience

Semiconductors, often called "the rice of industry," are essential to virtually every electronic device in modern society, from smartphones to cars to data centers. Yet the supply disruptions caused by the COVID-19 pandemic and the intensifying U.S.-China rivalry have made their vulnerability newly apparent worldwide.

Under the Economic Security Promotion Act, Japan designated semiconductors as a "specified critical material" in December 2022. Since then, it has drawn up the "AI and Semiconductor Industrial Base Strengthening Framework," aiming to provide more than ¥10 trillion in AI and semiconductor support through fiscal 2030 and, in public-private coordination, to target more than ¥50 trillion in domestic investment.

Building an Information-Sharing Platform

The MUFG Bank and NTT Data Initiative

On June 20, 2025, MUFG Bank and NTT Data signed a basic agreement aimed at realizing a platform for strengthening the domestic semiconductor supply chain. The effort consolidates data on the inventory and production status of semiconductor-related companies onto a system, creating an environment in which participating firms can produce components efficiently.

Specifically, it plans to provide visualization of the entire supply chain, real-time sharing of inventory and production data, support for data-driven decision-making, and improved liquidity through a financing scheme that uses inventory as collateral. It will first run proof-of-concept trials targeting the semiconductor-equipment supply chain in the Kyushu region, where capital investment has picked up with TSMC's arrival, and ultimately aims to expand nationwide and then globally.

The Need for a Cross-Industry Approach

In the semiconductor industry, the difficulty of demand forecasting and the high inventory risk mean there are limits to what any single company can optimize on its own. The lack of grasp and visualization across the whole supply chain has been a cause of missed opportunities and overinvestment.

By combining the know-how of "iQuattro," the supply-chain information platform NTT Data has offered since 2017, with MUFG Bank's finance functions, the venture is expected to build a cross-industry ecosystem uniting industry, government, academia, and finance.

Moves Toward Standardizing Specifications

Efficiency Through Common Standards

The Ministry of Economy, Trade and Industry (METI) is promoting the development of common specifications and standards to make public-private investment more efficient and accelerate the shift to implementation. Manufacturing equipment and materials are specified company by company, and that customization has made supply chains more complex and more expensive.

Standardization is expected to bring more efficient procurement, easier switching to alternative or general-purpose products, better alignment with global supply chains, and lower barriers to entry for new players.

Deepening International Cooperation

Japan is strengthening allied cooperation on the semiconductor supply chain through the "Fab4" alliance with the United States, South Korea, and Taiwan. It is also expanding industry-academia collaboration through LSTC (the Leading-edge Semiconductor Technology Center), a research-and-development hub for advanced semiconductor design and manufacturing technology.

The Government's Support Structure

Support Under the Economic Security Promotion Act

For its semiconductor supply-chain resilience program, METI allocated about ¥368.6 billion in the FY2022 supplementary budget and about ¥437.6 billion in the FY2023 supplementary budget, broadly supporting stronger production capacity for legacy semiconductors, manufacturing equipment, components and materials, and raw materials.

Support is prioritized in order: first, items essential to industries that form the base of Japan's economy, such as automobiles and industrial machinery; second, items indispensable to the leading-edge semiconductor supply chain; and third, items highly dependent on other countries and at particularly high risk of disruption.

Positioning as National Strategic Technology

The 7th Science, Technology and Innovation Basic Plan, covering fiscal 2026 through 2030, was approved by the cabinet on March 27, 2026. It designates AI, quantum, semiconductors, biotechnology, fusion energy, and space as "national strategic technologies," directing priority R&D budget allocation and tax incentives toward them. The plan also targets ¥60 trillion in government R&D investment over the five years, and ¥180 trillion including private-sector spending.

Outlook and Challenges Ahead

Anticipated Results

The government aims, by 2030, to achieve combined sales of more than ¥15 trillion for companies producing semiconductors in Japan (about ¥5 trillion as of 2020) and about ¥160 trillion in economic ripple effects. Concrete milestones sit alongside that goal: the start-up of TSMC's Kumamoto plant, and Rapidus's 2nm-generation semiconductors, targeted for mass production in 2027.

Remaining Challenges

At the same time, challenges have been noted: addressing the deepening talent shortage, adapting to environmental regulations such as PFAS restrictions, preparing for the uncertainties of geopolitical risk, and building a broad support structure that reaches small and medium-sized enterprises.

Building fabs does not by itself make a supply chain resilient. Whether Japan can see where inventory and production are actually stuck, and build a common base that absorbs differences in specifications, will decide how much this decade of investment returns.

How is strengthening the semiconductor supply chain being discussed in your country? We'd love to hear about government support measures and business-to-business collaboration where you are.

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