Armed with a new law boosting US support for computer chip manufacturing, Vice President Kamala Harris said the administration is looking for new investments and partnerships as she sat down with Japanese technology executives on Wednesday.
The morning meeting, her last full day in Tokyo, reflects the administration’s focus on boosting semiconductor production and expanding supply chains for critical materials.
The economy’s vulnerability to disruptions in the flow of computer chips became apparent during the pandemic, when shortages drove up costs and halted assembly of cars and other products.
“Citizens and people of our countries depend on semiconductor chips without knowing how much those products depend on them,” Harris said during a meeting at the US ambassador’s residence.
As China invests in its own computer chips, the US is trying to increase its domestic semiconductor production and is also working to strengthen technology ties with South Korea, Taiwan and Japan.
Harris said the U.S. understands that “no country can meet the world’s demands” and that “it’s important that we and our allies partner and coordinate in ways that allow us to grow and allow us to operate at a very pragmatic level.”
The legislation signed by President Joe Biden, known as the CHIPS and Science Act, includes $52 billion (roughly Rs. 4,25,700 crore) in grants and incentives for semiconductor companies, as well as a 25 percent tax credit when investing in US facilities. There is also about $200 (approx. Rs. 16,37,600 crore) billion to support research programs over the next decade.
Harris described the legislation as “a down payment on future American leadership,” but she emphasized that “we see Japan playing a very important and critical role.”
Jimmy Goodrich, vice president of global strategy for the Semiconductor Industry Association, said there is “a huge opportunity and an important place for investment in the future” that includes Japan.
Although Japan was once a world leader in computer chip production, its position has declined over the past two decades, and there are growing concerns that the country is falling behind.
Like the United States, Japan has established its own fund to support semiconductor production. Of the $4.3 billion (roughly Rs. 35,200 crore), $3.3 billion (roughly Rs. 27,020 crore) is being subsidized for a new factory in Kumamoto in the southwest of the country.
The facility is scheduled to start production by the end of 2024 and is a partnership between Taiwan Semiconductor Manufacturing Company, Sony Group and Denso.
Companies participating in meetings with Harris include Tokyo Electron, Nikon, Hitachi Hi-Tech Group, Fujitsu Ltd., Micron and others.
When Biden was in Japan earlier this year, the two nations agreed to work together on computer chips with a joint group focused on developing more powerful technology.
There is concern that if Japan is slow to act, the fruits of Biden’s initiative may be usurped by another, and more willing, Asian ally, South Korea.
Japan’s Minister of Economy, Trade and Industry Yasutoshi Nishimura has repeatedly emphasized the US-Japan alliance on semiconductors, as well as energy and other issues.
In recent meetings with US Commerce Secretary Gina Raimondo and US Ambassador Rahm Emanuel, Nishimura has promised to establish a facility for semiconductor chips research in Japan this year and expand partnerships on semiconductors with other allies including Europe and Taiwan.
Atsushi Tsunami, who teaches at the National Graduate Institute for Policy Studies, or GRIPS, in Tokyo noted that Japan’s failure to engage in defense studies may have its roots in Japan’s approach to advanced semiconductor technology.
This view stems from Japan’s role in World War II and the prevailing pacifist attitudes in Japan and international circles that followed its defeat. But Tsunami stressed that an immediate rethink was in order and that the US move could be an opportunity for Japan, given the US-Japan alliance.
“As the US-China hegemonic competition escalates, how Japan hopes to position itself in the jockeying for international standards and rule-making, and the strategic formation of alliances among nations as well as companies will make critical sense,” he said. In a report earlier this year.
