Some of the world's largest chip makers, including Intel, Micron Technology, Samsung Electronics and Taiwan Semiconductor Manufacturing (TSMC), have agreed to invest billions of dollars in Japan in a move that will boost the country's importance in the global chip industry. Washington has been the most aggressive in its attempt to reorganise the global semiconductor supply chain, and recipient companies of the funding will be barred from building “leading-edge” chip factories in China for 10 years, a move seen as designed to counter the country’s technological advancement.
Investors are turning their attention to Japan, which is experiencing accelerating governance reform, strong economic momentum, and sustained inflation, leading some analysts to question whether “Japan’s Rising Sun” will finally live up to its promises. Foreign institutions have purchased the country’s Topix index, which has hit a fresh 33-year high, and the Bank of America has said the Topix could increase by a further 33% to exceed its previous peak.
The change is arguably the biggest practical and psychological shift in the Japanese economy in decades. After years of stagnation, wages are now increasing, and Japan is experiencing sustained inflation with core inflation running at 3.4% annually.
Several geopolitical factors, such as Japan’s hosting of the G7 summit, China-US decoupling, military tensions, bloc formation for a new cold war, and the country’s positioning as a stable and supply-chain friendly partner of the west, as well as its presence as the fourth-largest economy in the world, are contributing to investors’ renewed interest in the country.
Beijing has reportedly launched punitive action against American chipmaker Micron over concerns regarding its products’ network security, thus denting the tech giant’s revenues by a “single-digit percentage”. This retaliation is most likely in response to the extensive chip export controls introduced by Washington last October. Foreign policy experts suggest that the use of tough rhetoric against China may hurt the possibility of cooperation with the west. The US successfully persuaded European countries to take a harder line over China, and an early test will come this week when China’s commerce minister Wang Wentao becomes the first senior official to visit Washington since 2020. Thus, global efforts are being made to build alternative chip supply chains that have the impetus of worsening relations between China and Taiwan, the country that produces more than 60% of the world’s chips and 90% of the most advanced. As the tech battle between the US and China continues, another Big Read suggests the AI revolution is transforming education, forcing schools and universities to restructure how they teach and test students.
The world's top three chipmakers, Intel, Samsung and TSMC, have revealed more than $220bn in new and existing volume-manufacturing initiatives since the beginning of 2021. Intel has announced $40bn in new sites including a "Silicon Junction" manufacturing complex in Magdeburg, Germany, and two leading-edge fabs in Ohio — capable of up to eight new factories. TSMC has expanded from an Arizona plant, begun work on a 28-nanometre chip plant in the southern city of Kaohsiung, and announced a small-scale factory in Kumamoto, Japan. Samsung's operations are mainly focused in Pyeongtaek, South Korea and Xi'An, China.
