🔗 There was a time when semiconductors were a "build it and they will come" business. But today, as geopolitical risks and economic security concerns surge, Japan is shifting its focus from just manufacturing capability to the power of information sharing and connectivity. A new challenge to oversee the entire supply chain has begun.
Background: Why Strengthen the Semiconductor Supply Chain?
Semiconductors are often called the "rice of industry," essential to virtually every electronic device in modern society, from smartphones to automobiles and data centers. However, the COVID-19 pandemic-induced supply disruptions and intensifying US-China tensions have exposed vulnerabilities in global semiconductor supply chains.
Under the Economic Security Promotion Act, Japan designated semiconductors as a "Specified Critical Material" in December 2022. Since then, the government has established the "AI and Semiconductor Industry Base Strengthening Frame," aiming to provide over 10 trillion yen in public support over seven years through 2030, with the goal of catalyzing 50 trillion yen in public-private investment.
Building Information Sharing Platforms
The MUFG Bank × NTT Data Initiative
In June 2025, MUFG Bank and NTT Data signed a basic agreement to establish a platform for strengthening domestic semiconductor supply chains. This initiative aims to consolidate inventory and production data from semiconductor-related companies into a centralized system, enabling participating companies to produce components more efficiently.
Key planned features include:
- Visualization of the entire supply chain
- Real-time sharing of inventory and production data
- Support for data-driven decision making
- Improved capital liquidity through inventory-backed financing schemes
The pilot will initially target semiconductor manufacturing equipment supply chains in Kyushu, where investment has surged following TSMC's entry, with plans to expand nationwide and eventually globally.
The Need for Cross-Industry Collaboration
In the semiconductor industry, the difficulty of demand forecasting and high inventory risks make it challenging for individual companies to optimize independently. The lack of comprehensive supply chain visibility has led to missed opportunities and excessive investment.
By combining NTT Data's expertise with its "iQuattro" supply chain information platform (operating since 2017) and MUFG Bank's financing capabilities, the initiative aims to build a cross-industry ecosystem uniting industry, government, academia, and finance.
Progress Toward Specification Standardization
Efficiency Through Common Standards
The Ministry of Economy, Trade and Industry (METI) is promoting the development of common specifications and standards to accelerate implementation and improve the efficiency of public-private investment. Currently, semiconductor manufacturing equipment and materials are heavily customized by company, adding complexity and costs to supply chains.
Expected benefits of standardization:
- Streamlined procurement processes
- Easier transition to alternative or generic products
- Better alignment with global supply chains
- Lower barriers to entry for new players
Deepening International Cooperation
Japan is strengthening semiconductor supply chain cooperation among allies through the "Fab4" alliance with the United States, South Korea, and Taiwan. Additionally, the country is expanding industry-academia collaboration through LSTC (Leading-edge Semiconductor Technology Center), a research and development hub for advanced semiconductor design and manufacturing.
Government Support Framework
Support Under the Economic Security Promotion Act
METI has allocated approximately 368.6 billion yen in the FY2022 supplementary budget and 437.6 billion yen in the FY2023 supplementary budget for semiconductor supply chain resilience initiatives, broadly supporting capacity building for legacy semiconductors, manufacturing equipment, materials, and raw materials.
Priority support targets:
- Components essential to foundational industries like automotive and industrial machinery
- Items indispensable to cutting-edge semiconductor supply chains
- Items with high dependence on specific countries and elevated disruption risks
Designation as National Strategic Technology
Under the 7th Science, Technology, and Innovation Basic Plan starting in FY2026, six fields including AI and semiconductors are expected to be designated as "National Strategic Technologies." These fields will receive priority allocation of R&D budgets and tax incentives allowing up to 40% tax credits.
Future Outlook and Challenges
Expected Outcomes
By 2030, Japan aims to achieve combined domestic semiconductor production revenues exceeding 15 trillion yen (up from approximately 5 trillion yen in 2020), generating an estimated 160 trillion yen in economic ripple effects. Concrete milestones include the operational launch of TSMC's Kumamoto plant and mass production of 2nm generation semiconductors by Rapidus.
Remaining Challenges
However, several challenges remain:
- Addressing critical talent shortages
- Adapting to environmental regulations such as PFAS restrictions
- Preparing for geopolitical risk uncertainties
- Building support systems that extend to SMEs
Japan's efforts to strengthen its semiconductor supply chain go beyond simply expanding manufacturing capacity. The country is now seriously committing to enhancing its "power to connect" through information sharing and standardization. If successful, Japan's semiconductor industry will evolve to a new stage.
How is your country discussing semiconductor supply chain strengthening? What government support measures or corporate collaboration initiatives exist? We'd love to hear your perspective!
References
- https://www.nttdata.com/global/ja/news/topics/2025/062000/
- https://www.meti.go.jp/policy/economy/economic_security/semicon/index.html
- https://www.cao.go.jp/keizai_anzen_hosho/suishinhou/supply_chain/supply_chain.html
- https://www.ey.com/ja_jp/insights/supply-chain/a-new-blueprint-for-supply-chain-resilience-and-economic-safety
- https://www.jetro.go.jp/biz/areareports/special/2024/0501/eaff5a40be998a78.html
Reactions in Japan
The MUFG and NTT Data supply chain platform is finally moving forward. As someone who suffered from semiconductor shortages, I truly believe an information sharing system is necessary. But I wonder if participating companies will want to show data to competitors.
The government's 10 trillion yen support and concentrated investment in Rapidus is good, but we need more holistic strengthening of the entire supply chain. Without substantial support for equipment manufacturers and material companies, foreign dependence will continue.
The information sharing platform is an interesting initiative. But I hope it expands nationwide quickly, not just Kyushu. Small IT companies like ours also struggle with semiconductor procurement.
Kyushu is definitely booming with the TSMC effect in Kumamoto. Our clients have increased too. But the labor shortage is too severe - I wish they'd support talent acquisition before platforms.
Information sharing in semiconductor supply chains is extremely important from an economic security perspective. However, if security measures are inadequate, it could expose vulnerabilities. I hope governance is properly addressed.
I strongly support specification standardization. Even in R&D, specifications vary too much between companies, making it difficult to commercialize basic research results. Standardization is essential for bridging academia and industry.
More companies seem to be riding the government subsidy bubble. As an investor, I want to assess whether business models will be sustainable after subsidies end.
I hope semiconductor logistics is included in information sharing. Since they're delicate products, transport condition management is crucial, but upstream and downstream coordination is lacking. More standardization is needed for temperature control and vibration protection.
Not just Kyushu, but Rapidus in Hokkaido is also noteworthy. It's good that semiconductor industry revitalizes rural areas. But I hope they nurture it with a long-term perspective to avoid post-bubble ruins.
I'm worried whether Japan's semiconductor industry can handle PFAS regulations. Restrictions may start in Europe and the US as early as 2025. Some say developing alternatives could take 15 years. This could become a problem before supply chain issues.
As someone who experienced the Japanese semiconductor era of the 80s, I hope this succeeds. Back then, there was more domestic competition than international cooperation. If an information sharing culture takes root, results should be different this time.
I'm considering a career in semiconductors, but isn't entry-level hiring limited despite talk of talent shortages? Before information sharing, I wish the whole industry would get serious about talent development.
This platform seems designed for large corporations. Small factories like ours are left out. Unless they pay attention to the fringes of the supply chain, it'll just be a structure where only big companies benefit.
Inventory-backed financing is an interesting scheme. Since semiconductor values fluctuate significantly, real-time information sharing could enable proper collateral valuation. I hope the fusion of finance and tech advances further.
Taiwan's TSMC built its ecosystem over decades. Japan trying to catch up in a few years is naive. But the information sharing approach might become a unique strength Taiwan lacks. Half hopeful, half anxious.
Compared to America's CHIPS Act, Japan's approach is intriguing. We're focused on attracting factories through subsidies, but Japan is also focusing on the 'soft' aspect of information sharing. It'll be interesting to see how this difference plays out in a few years.
Germany is also working on strengthening semiconductor supply chains, but coordination across the entire EU is difficult. I envy how Japan can quickly advance policies as a single country. However, the EU Chips Act was passed in 2023, so I have expectations for the future.
Korea just announced support measures of 33 trillion won. We're in competition with Japan, but I think there's room for cooperation in supply chain information sharing. We should better utilize the Fab4 framework.
As a Taiwanese, Japan's initiatives are interesting, but creating an ecosystem like TSMC's in just a few years is impossible. However, I acknowledge the strength of Japanese material and equipment manufacturers. Building a complementary relationship could be win-win.
India is also trying to enter semiconductor manufacturing. Japan's information sharing platform initiative is instructive. An international framework that emerging countries can join would contribute to global supply chain strengthening.
From the UK's perspective, Japan's moves look very strategic. After Brexit, we also need our own supply chain strategy. If Japan succeeds, I'd definitely want to learn from their example.
France also prioritizes the semiconductor industry from an economic sovereignty perspective. Japan's public-private integrated approach seems more effective with faster decision-making than the EU. I'd like to explore cooperation with STMicroelectronics.
From China's perspective, Japan's supply chain strengthening clearly has us in mind. However, complete decoupling would be a loss for both sides. Honestly, I hope room for technological exchange remains.
Brazil is a latecomer in semiconductor manufacturing, but Japan's efforts could be a model case for emerging countries to catch up. The concept of efficiency through information sharing is especially needed in resource-limited countries.
From Poland's perspective, Japan's semiconductor policy serves as a reference for a country seriously considering economic security. Eastern Europe is gaining attention as a supply chain diversification destination, so I'm hopeful for cooperation with Japan.
Vietnam has Samsung and Intel factories, and the semiconductor industry is growing. Partnerships with Japanese companies are increasing. If information sharing platforms expand to ASEAN, it would strengthen the entire region's supply chains.
Australia has almost no semiconductor manufacturing, but we're important as a critical mineral supplier. We welcome Japan's supply chain strengthening, but we'd like attention paid to raw material procurement diversification too.
Mexico is paying attention to the semiconductor industry as part of the North American supply chain. Japan's information sharing initiative could be a reference within the USMCA framework too. We want to leverage the nearshoring trend.
The Middle East, especially the UAE, is beginning to invest in the semiconductor industry. We want to learn best practices from mature industrial countries like Japan. Information sharing and standardization are important concepts for new entrants too.
Sweden recognizes the importance of semiconductors through telecom equipment makers like Ericsson. Japan's supply chain information sharing is of interest to Nordic companies too. We expect collaboration via the EU.