History of Policies Related to Japan’s Semiconductor Industry from the Late 1990s to the 2010s

Since the 1990s, the global semiconductor integrated circuit (IC chip) industry has developed technical roadmaps and, in the face of major technical barriers, expanded areas of collaboration in non-competitive areas, leading to the establishment of joint research and development frameworks in Europe and the United States. Subsequently, through the 2010s, integration continued to advance, but at the same time, the degree of oligopoly increased across various markets within the IC chip industry, driven by the monopolistic power held by major players. In Japan as well, collaborative research and development frameworks were established starting in the mid-1990s under the leadership of manufacturers but supported by policy. However, these frameworks failed to perform important functions such as concentrating resources in promising technological fields, leveraging external resources, and facilitating the smooth commercialization of results. In the early 2000s, there was a proposal for a plan to establish a dedicated foundry based on standardized manufacturing processes, and the Ministry of Economy, Trade and Industry (METI) also promoted the plan, but it never came to fruition. As a result, Japan’s technological contributions to the IC chip industry remain relatively limited to a few product areas—such as sensors and flash memory—as well as manufacturing equipment and materials, where the development of core technologies yielded results, keeping the domestic industry modest. The decline in investment in the semiconductor industry can be seen as the result of manufacturers’ adaptive business strategies in response to these conditions. If more effective industrial policy had been implemnted for IC chips, they might have been effective in mitigating the negative effects of monopolies and making effective use of semiconductor talent.