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Factbox-Japan ramps up efforts to strengthen its chip industry

FILE PHOTO: Illustration picture of semiconductor chips on a circuit board

TOKYO (Reuters) – Semiconductor materials maker JSR Corp’s board will meet on Monday to discuss a potential multi-billion dollar buyout by a government-backed fund that would mark an acceleration of Japan’s efforts to strengthen its chip industry.

Below are investments in Japan announced by chipmakers and measures the government is taking to revive its semiconductor industry.

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WHICH COMPANIES ARE INVESTING?

Taiwan Semiconductor Manufacturing Co (TSMC) announced in November a plan to build a $7 billion chip plant on Kyushu island, with production of 12 and 16 nanometre chips slated to begin in 2024.

Sony Group and auto parts maker Denso, which will use the chips TSMC makes, are also investors.

U.S. memory chipmaker Micron Technology said in May it planned to invest up to 500 billion yen ($3.5 billion) in extreme ultraviolet technology (EUV) over the next few years with support from the Japanese government. It said it would be the first chipmaker to bring EUV technology to Japan for production.

Samsung Electronics is considering setting up its first chip packaging test line in Japan near its existing research and development centre in Yokohama, sources told Reuters in March.

Japan’s state-backed Rapidus said in February it would build a chip plant in Chitose, a manufacturing hub on the nation’s northern island of Hokkaido.

Rapidus, which has a tie up with International Business Machines (IBM) to develop and produce cutting-edge 2 nanometre chips, aims to launch a prototype line in 2025.


GROWTH PLANS AND SUBSIDIES

Japan, which has seen its share of the global semiconductor market fall from 50% in the late 1980s to about 10%, aims to treble sales of chips made in the country to 15 trillion yen by 2030 by encouraging investment and offering various forms of support.

It has offered TSMC a 476 billion yen subsidy, or about half the expected cost of the factory.

Rapidus secured an initial 70 billion yen of funding from the government, and local media reported in April that the government was finalising a plan to provide an additional 300 billion yen.

Japan is also arranging subsidies that could be worth around 15 billion yen to Samsung for the chip facilities it is considering setting up, Reuters reported in May, citing a source.


EXPORT CONTROL

Japan said in March it would restrict exports of 23 types of chipmaking gear, aligning its technology trade controls with a U.S. push to curb China’s ability to make advanced chips.

Japan, home to major chip equipment makers such as Nikon and Tokyo Electron, did not name China as the target of the restrictions, saying manufacturers would need to seek export permission for all regions.


STATE-BACKED FUND

State-backed Japan Investment Corp (JIC), which is overseen by the powerful trade ministry, is in talks with JSR about a buyout, the chip materials maker said.

The fund, backed by $20 billion of government money, was set up in 2018 to invest in Japanese companies to boost the nation’s competitiveness.

It took over the role from the Innovation Network Corp of Japan (INCJ), which was created in 2009 as a temporary scheme to promote new industries and business consolidation.

INCJ largely focused on cash-strapped or ailing firms. Its past investments include chipmaker Renesas and flat screen firm Japan Display.

JIC has so far focused mostly on investing in startups and venture capital funds.

It also participated in the bidding to take Toshiba private jointly with private equity firm Japan Industrial Partners, but later dropped out due to disagreements over post-buyout strategies.

($1 = 143.2600 yen)

(Reporting by Makiko Yamazaki, Sam Nussey, Tim Kelly and Miho Uranaka; Compiled by Miyoung Kim; Editing by Jamie Freed)

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