Taiwan chip firms flock to Japan as China decoupling accelerates
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[February 22, 2024] By
Sam Nussey, Fanny Potkin and Miho Uranaka
TOKYO (Reuters) - Japan's efforts to rebuild its semiconductor industry
are getting a shot in the arm as more and more Taiwanese chip companies
expand here - not only to support a new TSMC plant but also excited
about the Japanese sector's prospects.
The influx comes amid shifting alliances and priorities in the global
chip industry as the United States pushes to limit China's progress in
cutting-edge semiconductors and strengthen partnerships between its
allies.
Fabless chipmaker Alchip Technologies, which specializes in customized
chips known as application-specific integrated chips (ASICs), is
illustrative of the China decoupling trend.
In 2022, the bulk of its research and development engineers were based
in China but Alchip has begun moving roles overseas, many to Japan, said
a source who was briefed on the matter.
The company said it is hiring in Japan, North America and Taiwan but
declined to comment further on personnel matters.
"We're expecting Japan semiconductor market growth, we're continuously
capitalizing on Japan ASIC opportunities and already engaging in several
good projects," said Hiroyuki Furuzono, general manager of Alchip Japan.
At least nine Taiwanese chip firms have set up shop or expanded
operations in Japan over the past two years, according to a Reuters
count.
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Chip design company eMemory Technology, for example, opened an office
two years ago in Yokohama, which neighbors Tokyo, and has 11 employees
after hiring from Japan conglomerates which once dominated the industry.
"After we built the office there we are receiving more frequent
communication with the customers and they are more willing to talk in
Japanese with our local people, so we see business is booming," eMemory
President Michael Ho told Reuters.
More Taiwanese chip sector firms are also looking at increasing their
presence or making their first foray into Japan, said the source and
another person with knowledge of the matter, adding that a weak yen has
made such decisions easier.
The sources declined to be identified as the information was not public.
PROACTIVE SUPPORT
While Japan still boasts leading semiconductor material and equipment
makers, it has seen its share of the global chip manufacturing market
shrink to 10% from around 50% in the 1980s after trade tensions with the
U.S. and competition from South Korean and Taiwanese rivals.
But in recent years Japan has thrown huge sums to rebuild its chip
manufacturing sector, recognizing that semiconductors are vital for
economic security and spurred on by the global chip shortage during the
pandemic as well as encouragement from Washington.
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Semiconductor chips are seen on a printed circuit board in this
illustration picture taken February 17, 2023. REUTERS/Florence
Lo/Illustration/File Photo/File Photo
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This Saturday, TSMC, formally known as Taiwan Semiconductor
Manufacturing Co, will hold the opening ceremony for its first plant
on the southern island of Kyushu, a chipmaking hub.
The on-track plan contrasts with the troubled construction of TSMC's
Arizona factory. It has also just announced plans for a second fab
in Japan, bringing total investment in the venture to more than $20
billion.
The chipmaking giant, Reuters has reported, sees Japan as a natural
fit in terms of an industrious work culture and a government that is
easy to deal with and generous with subsidies.
"The core strength of a strong semiconductor country lies not just
in leading firms but in a robust ecosystem," said Nori Chiou,
investment director at White Oak Capital.
"Japan's proactive government support, marked by substantial
subsidies and minimal political interference, sets it apart,
fostering superior progress compared to many other countries."
In addition to TSMC, the Japanese government-backed chip foundry
venture Rapidus plans to mass produce chips on the northern island
of Hokkaido from 2027. Taiwan's Powerchip is also seeking government
subsidies to set up a $5.4 billion foundry in Japan.
Taiwanese firms boosting their presence in Japan include TSMC-backed
Global Unichip Corp (GUC), another fabless designer of ASICs, which
said it is attracted by both the engineering talent and business
opportunities.
Additionally, Materials Analysis Technology (MA-tek), which inspects
semiconductor materials and cites TSMC as its biggest client, opened
a new lab in Kyushu late last year. Semiconductor equipment and
maintenance firm Finesse Technology, another key TSMC contractor, is
building a factory in Japan.
TSMC supplier Marketech is also expanding in Japan, the sources
said. Marketech declined to comment.
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"The trend will continue for the foreseeable future as part of
decoupling," said Takamoto Suzuki, head of China economic research
for trading house Marubeni. He warned, however, that Japan may not
have sufficient young science industry workers to meet demand.
The number of workers in Japan's chip-related businesses has
declined by around a fifth over the last roughly two decades,
although the government and universities have ramped up efforts to
encourage students into the field.
(Reporting by Sam Nussey and Miho Uranaka in Tokyo and Fanny Potkin
in Singapore; Editing by Edwina Gibbs)
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