Japan attracts 6 trillion yen in foreign chip investment in bid to reclaim semiconductor dominance

Foreign chipmakers including TSMC have poured a combined 6 trillion yen ($37.7 billion) into Japan since 2021, buoyed by the Japanese government's sweeping subsidy policy, the Nikkei reported Wednesday. The figures underscore Japan's all-out push to rebuild its semiconductor production base through foreign investment — a striking reversal for a country that once dominated the global chip industry before losing its footing.

According to the report, TSMC officially announced Tuesday, alongside Sony Group, a 747 billion yen investment in Kumamoto Prefecture to mass-produce image sensors. That comes on top of more than 3 trillion yen TSMC had already committed to its first and second factories in Kumamoto.

US chipmaker Micron is investing 1.5 trillion yen to build a cutting-edge DRAM production line at its Hiroshima factory, while Israel's Tower Semiconductor is committing 600 billion yen to facilities in Toyama Prefecture and elsewhere.

Japan commanded more than 50 percent of the global semiconductor market in the late 1980s, driven by companies such as NEC, Hitachi and Toshiba. But the collapse of the asset bubble in the 1990s sent the country into a prolonged decline, and by the 2010s its market share had fallen to around 10 percent as South Korea and Taiwan took the lead.

In response, the Japanese government is betting its revival on a multipronged strategy: attracting foreign investment while also supporting domestic chipmaker Kioxia's NAND flash capacity expansion and pushing Rapidus to begin mass production of 2-nanometer chips.

Yet Japan's investment scale still lags far behind its rivals, the Nikkei noted. South Korea is pursuing a massive 800 trillion won investment program centered on Samsung Electronics and SK Hynix, while the United States continues to draw enormous foreign capital on the back of surging demand from its tech giants.

To revive its semiconductor industry and sustain competitiveness, Japan must go beyond simply attracting production facilities and also cultivate chip design companies and domestic end-users, the Nikkei said.