The tech world is currently highly dependent on semiconductor technology. Chip manufacturing is one of the most complex yet fragile industries around. The recent semiconductor shortages have made it evident that any fluctuation in chip production can affect multiple industries all over the globe. Therefore, it is quite an enigma that so few companies have total control over the whole industry. Resultantly, when there are any hiccups in the supply chain, the whole world feels their impact. As an example, consider how the next-gen consoles are still not easily available. You’ve probably seen bits and pieces of this whole scenario on your Superinternetdeals.com. Chip shortages, resulting from widespread cryptocurrency mining, have led to this situation.
Previously, Japan held half of the world’s chip manufacturing shares. However, the US and China have been pushing to get their own slices of the pie, with more aggressive and practical tactics. Resultantly, Japan’s share has fallen to one-tenth. This is expected to go even lower, as the US and China are striving to outdo each other in the industry. Japan is quite concerned about this whole situation, as it involves quite a few problems.
The Survival of World-Leading Firms
There are still some major world-leading firms based in Japan, which supply materials for semiconductors to chipmakers. These supplies include silicon wafers, production machinery, and chemical films.
US companies have already tempted some of these suppliers to move to US soil, with convenience playing the main role. This means that many top-tier firms may move their operations from Japan, leading to a further decrease in its chip share.
Aggressive Tech Race
Japanese industries have traditionally focused on quality and meticulousness rather than rapid operations. This means that their rates may be higher than those of Chinese and US firms. Resultantly, Japanese companies cannot really participate in the aggressive tech race. Undercutting other company’s prices is something that is not really in the Japanese work vocabulary.
Therefore, Japan cannot really compete based on pricing and speed alone. Currently, it has its high quality going in its favor, but it’s only a matter of time before other countries achieve this quality at cheaper prices.
Possibility of a Zero Chip Share Industry
With the US and China squaring off quite openly, Japan’s chip share is in danger of dwindling down to zero. This is quite a problem for the country, as many of its companies and people are depending on this sector. If Japan loses even its remaining share of the pie, it could lead to an economic crisis in the country.
Tech is currently one of Japan’s biggest exports, so it cannot afford to completely be out of the game. However, as things stand, this could be quite possible.
Lack of Government Incentives
Government support is also a major factor in this dilemma. While Japan has allocated $4.5 billion dollars for supporting technology supply chains, this is a mere fraction of what other countries are doing. In contrast, the US Senate has approved an astounding $190 billion for new technology, with $54 billion for chips alone. It has made these allocations in order to counter China’s rise in the tech market.
This dwarfs the support the Japanese government is offering. However, Japan really can’t earmark such huge amounts for technology subsidies. Its aging population has different requirements, leading to more need for welfare and healthcare support.
National Security Risk
This whole situation can actually boil over into a national or even international security risk. A lot of the resources gathered from the tech industry go back into revitalizing the nation’s economy. If Japan loses out on these resources, its overall economy will suffer.
In such situations, homelessness, poverty, and crime tend to go up. All of this poses a threat to national security. However, without the resources from the tech industry, it’ll be hard to invest in security as well.
Exchange of Information
One of the reasons why the US is pushing tech companies to move to its soil is for easier exchange of information. Many tech companies are now based in the US. If they have their chip and semiconductor manufacturers in the same country, then information exchange and innovation become much easier.
This means that these companies will do their best to get manufacturers to come to US soil so that they can compete with China more efficiently.
To sum up, the US vs China tech war has left Japan in the lurch. Unless the country takes some really drastic measures, this situation is not expected to change anytime soon.