In the late 1980s, Japan was the undisputed master of the semiconductor industry. Tokyo later lost its crown, but recent events confirm that the sleeping giant has awakened, this time with a comprehensive comeback plan that aims not just to compete, but to reclaim its natural position.
1. The Crisis That Exposed the Power: The "Coca-Cola Recipe"
In July 2019, Samsung was surprised by a Japanese decision imposing restrictions on the export of three vital chemical materials to South Korea, including Photoresist, one of the most crucial materials in semiconductor manufacturing.
Imminent Danger: Samsung entered a state of emergency, with its stock barely lasting a few weeks. Why? Because Japan controls 80% to 90% of the Photoresist market, especially for the latest Extreme Ultraviolet (EUV) lithography technology.
Secrecy of Composition: There is no easy alternative. The composition of this material is highly complex and fiercely guarded, almost rivaling the secrecy of the Coca-Cola or Pepsi recipe.
The Hidden Lever: This incident, which required mediation from Samsung's Vice Chairman himself, served as a stark reminder of Japan's leverage: it may not produce the most advanced chips, but it controls the crucial joints of the vital supply and production chain.
2. From Past Throne to Present Levers
In the late eighties, Japan alone controlled over 50% of the global semiconductor market, reaching 80% to 90% in some years. Giants like NEC, Toshiba, Hitachi, and Mitsubishi were major players.
Today, even after its share in chip production has dropped to about 10%, Japan still controls indispensable choke points:
Chemical Materials: Japan dominates 97% of the market for chemical materials used in EUV lithography for 7nm chips or less.
Silicon Wafers: Over half of the global production of the wafers upon which chips are printed comes from just two Japanese companies.
Vital Equipment: Tokyo Electron (TEL) is the third-largest company globally in semiconductor manufacturing equipment sales, following Applied Materials and ASML of the Netherlands.
3. Rapidus: The Spearhead of the Comeback
The Giant Alliance: In August 2022, a consortium of eight giant Japanese companies (including Toyota, Sony, SoftBank, and Mitsubishi) announced the establishment of Rapidus (meaning "Swift" or "Rapid").
The Bold Goal: Rapidus aims to produce 2nm chips by 2027. This is a striking target, as industry giants like TSMC and Samsung have only just reached this generation commercially this year.
The Source of Confidence: This confidence is based on two factors:
Their current strength in the supply chain (mentioned above).
Their partnership with the US technology giant IBM, which developed the 2nm technology in its labs.
Unprecedented Government Support:
The Japanese government has put its financial weight behind this project, initially supporting it with $12 billion, with plans for a total investment reaching $65 billion to bolster the semiconductor industry by 2030.
4. The Secret Weapon: From Mass Production to Custom Tailoring
To compete with mass-production giants like TSMC and Samsung, Rapidus has decided not to play by the same rules. Instead of being a "large clothing factory" producing millions of identical pieces, they aim to be the "tailor" that custom-fits a suit for every client.
The Advantages That Flip the Table:
Unmatched Flexibility: They can fulfill small orders (such as 500 chips with a specific design) from startups, a type of request that mass-production giants typically reject.
Speed and Efficiency (The Miracle): They aim to achieve the fastest production cycle in the world. Crucially, they anticipate reaching a Yield Rate (Success Rate) of 50% from day one, jumping to 80–90% within one year. This is phenomenal, as the established leaders often take a full year to achieve just 30%.
Performance and Specifications: The competition isn't limited to production rate; leaks suggest that the transistor density in Rapidus's chips could reach a level comparable to TSMC, clearly surpassing the latest Intel technologies.
Rapidus is merely the spearhead of a comprehensive Japanese plan that includes attracting foreign investment (such as the opening of two TSMC factories) and developing local equipment companies (like Canon).
Will Japan succeed in reclaiming its glory? Given its historical track record and the successful launch of its first advanced EUV lithography tool, it certainly appears they are determined to do so.