The Japanese Ministry of Economy, Trade, and Industry (METI) has begun its long-term goal to revive Japan’s flagging semiconductor industry, with plans to make investments totaling $36 billion over the next decade and offering around $500 million in subsidies. In 2022 METI brought together some of Japan’s biggest tech names, including Sony, Toyota, and SoftBank, to create the domestic semiconductor enterprise Rapidus. With assistance from IBM, Rapidus has the mission to develop and eventually manufacture the next generation of advanced chips domestically.

In 1988, Japan accounted for [51 percent](https://www.csis.org/blogs/perspectives-innovation/japans-semiconductor-industrial-policy-1970s-today#:~:text=During the 1970s-1980s%2C Japan,in global semiconductor market trends.) of worldwide semiconductor sales. Today, the global market is dominated by Taiwanese and South Korean manufacturers. But this is something the Japanese government is already taking steps to change. It smoothed the way to bring the world’s most successful microchip company, Taiwan Semiconductor Manufacturing Company (TSMC), to Japan with a planned $8.6 billion manufacturing plant. METI will put up 40 percent of the cost for the venture, which also brings in Sony.

“It is generally a bad idea for the government to intervene in the free and fair global trade of industry,” said Tadahiro Kuroda, a professor at the University of Tokyo, who is contributing research work to the Rapidus project. “However, it is not from that point of view that the government is intervening now but from the point of view that this semiconductor has become extremely important as a strategic commodity.”

Japan’s efforts are a part of the much bigger standoff between China and the United States over advanced semiconductors as all major economies shift from the “just in time” philosophy that led to expanded global supply chains to the necessity of having products nearby “just in case.”

COVID-19 made governments acutely aware of the fragility of supply chains and the critical dependence on countries that might later prove wartime foes. “This is not only the case in Japan,” said Hideki Wakabayashi, a professor at the Tokyo University of Science. “I believe the entire world will be moving in this direction.”

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