Japan Bets Big on Bringing Semiconductor Manufacturing Home

TOKYO—To get back some of the high-tech mojo that made it an economic powerhouse, Japan is launching an ambitious program to bring back cutting-edge semiconductor manufacturing, a field it ceded to Taiwan, South Korea, and China nearly 20 years ago. But will this new campaign at state-backed industrial policy succeed, and more importantly, is it even the right goal?

The new initiatives are part of a broader strategy of greater “economic security” under Prime Minister Fumio Kishida’s administration, a need driven home by the massive supply chain disruptions that occurred globally under the weight of shifting supply and demand amid COVID-19.

It is also part of what is, in effect, a broad-based defense mobilization program to contain an increasingly ambitious China—one that fits nicely in with the Biden administration’s own plans. Washington has put increasingly tight limits on U.S. companies’ involvement in Chinese chip manufacturing, seeking to keep control of the advanced electronics vital to modern warfare—and the economy as a whole—within its wider sphere of allies like Taiwan and Japan.

Other segments of the Japanese plan range from more advanced weapons systems, an ability to strike an enemy’s bases back at home (despite Japan’s constitution forsaking warfare), and roughly doubling military spending to 2 percent of GDP by 2027. It is a very full agenda, especially for a government that is now teetering from various scandals that always seem to befall Japanese administrations that are seen as already weak.

Whatever the fate of the Kishida government, this combination of security and economic nationalism appears set to remain, driven by a new generation within the long-ruling Liberal Democratic Party. This more hard-line group of lawmakers, who coalesced under Shinzo Abe, Japan’s first postwar prime minister, appears keen to abandon much of the caution that has underscored Japan’s economic and diplomatic policymaking.

Source : foreignpolicy.com / For more Details

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