Japan sees peril in U.S. chip hub to counter China

TOKYO (Reuters) – Japan is worried that U.S. plans to pour billions of dollars into chip manufacturing to fend off China could finish off what’s left of a Japanese semiconductor industry that once dominated the world.

After “three lost decades”, according to Japan’s industry ministry, the country’s share of global chip manufacturing has fallen from a half to a tenth as it leaked customers to cheaper rivals and failed to maintain a lead in cutting edge production.

As China and the United States, driven by a trade war and security concerns, ramp up support for the manufacturing of chips that run everything from smartphones to missiles, officials worry Japan will be squeezed out altogether.

“We can’t just continue what we have been doing, we have to do something on a completely different level,” former Prime Minister Shinzo Abe told fellow ruling LDP party members in May at a first party meeting to discuss how the country can be a leading digital economy.

Illustrating Japan’s fear of being left out of a new technology world order, documents distributed by the Ministry of Economy Trade and Industry earlier this year showed a thick red dotted line over a bar graph pointing to the possibility of a zero chip industry share by 2030.

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