The video explores Japan's efforts to regain its prominence in the semiconductor industry, once a global leader in chip production during the 1980s. It highlights Japan's current strategy of massive investments, partnerships with international giants like TSMC and IBM, as well as bolstering local industries to revitalize its semiconductor manufacturing capabilities. Emphasis is given to developing advanced 2-nanometer chips crucial for AI, autonomous vehicles, and other tech innovations.

The narrative delves into the challenges faced by Japan in competing globally amidst technological advancements and geopolitical tensions. The initiatives, pushed by both the government and private sectors, include massive subsidies and collaborations aimed at regaining competitive edge while ensuring national security through advanced chip production. The discussion touches upon Japan's strategic moves, including engaging tech leaders like Preferred Networks, to bring innovation in AI and other critical technologies.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. semiconductors [ˌsɛmiˈkʌndʌktərz] - (noun) - Materials that have conductivity between conductors and insulators, used to make electronic circuits. - Synonyms: (ICs, integrated circuits, microchips)

These modern comforts, which we take for granted, are all powered by semiconductors.

2. fabricated [ˈfæbrɪˌkeɪtɪd] - (verb) - Constructed or manufactured, typically in reference to producing a product or structure. - Synonyms: (manufactured, constructed, produced)

Devices like smartphones and gaming consoles are all powered by semiconductors, tiny silicon chips smaller than a fingernail, which often take weeks, even months to be fabricated.

3. renaissance [ˌrɛnəˈsɑns] - (noun) - A revival or renewed interest in something. - Synonyms: (revival, resurgence, renewal)

This semiconductor renaissance is happening far away from Japan's economic center, Tokyo.

4. geopolitical [ˌdʒiːoʊpəˈlɪtɪkl] - (adjective) - Relating to the influence of geographic factors on politics and international relations. - Synonyms: (political-geography, international-political, territorial-political)

Currently, a large portion of global production is based in Taiwan and South Korea, making the supply chain vulnerable to geopolitical tensions.

5. mobilize [ˈmoʊbəˌlaɪz] - (verb) - To organize or prepare resources for active pursuit of an objective. - Synonyms: (activate, deploy, assemble)

Can Japan, with its much smaller economy, really hope to compete with everyone getting mobilized to fulfill this semiconductor dream? Can Japan be one of the top players in semiconductor? Okay, don't ask me that

6. stagnation [stæɡˈneɪʃən] - (noun) - A period of little or no growth in an economy or activity. - Synonyms: (inaction, slow growth, economic standstill)

Japan's economy began a lengthy period of economic stagnation and its chip technology began to slip behind its rivals.

7. vulnerability [ˌvʌlnərəˈbɪləti] - (noun) - The quality or state of being exposed to potential harm. - Synonyms: (weakness, susceptibility, exposure)

Currently, a large portion of global production is based in Taiwan and South Korea, making the supply chain vulnerable to geopolitical tensions.

8. subsidies [ˈsʌbsɪdiz] - (noun) - Financial support provided by the government to help an industry or business remain viable. - Synonyms: (grants, aids, financial support)

The initiatives, pushed by both the government and private sectors, include massive subsidies and collaborations aimed at regaining competitive edge.

9. autonomous [ɔːˈtɒnəməs] - (adjective) - Capable of operating independently without human intervention. - Synonyms: (independent, self-governing, self-reliant)

Japanese car industry must have kind of accessibility to Most advanced semi technology, 2 nano, 1.4 nano to realize their most advanced business model, autonomous driving.

10. pilot [ˈpaɪlət] - (noun) - A small-scale preliminary study conducted to evaluate the feasibility, time, cost, risk, and adverse events involved in a research proposal. - Synonyms: (preliminary, trial, test)

JSM is planning to begin mass production soon, while RAPID is scheduled to open a pilot FAB next year.

How Japan is Getting Its Chip Mojo Back - Momentum

Take a look around you. Can you imagine what our world would look like if there were no mobile phones, computers, TVs, cars, trains or even the Internet? These modern comforts, which we take for granted, are all powered by semiconductors. And most of these small but mighty chips are manufactured right here in Asia. While Taiwan leads the world in the production of advanced semiconductors, Japan is gaining momentum, outspending the United States and Germany on chip subsidies.

In terms of GDP, Japan is going all in on semiconductors, making a $67 billion bet to once again become a global chip powerhouse. But is it all too little, too late? Can Japan buy its way back into the semiconductor race?

I'm Haslinda Amin and this is Momentum. In the 80s and early 90s, Japan ruled the chip world. In 1988, its companies controlled 50% of global chip sales. Then the dot com bubble buzz. Japan's economy began a lengthy period of economic stagnation and its chip technology began to slip behind its rivals in Taiwan and the U.S. Japan wants to revive its semiconductor glory days of the 1980s and it's mobilizing everyone. The government, the private sector, academia, even international partners like TSMC and IBM. That means billions in investments and billions more in subsidies. And the stakes are high.

Advance chips will serve as the foundation for a dozen critical technologies, including artificial intelligence, weapon systems and electric vehicles. Devices like smartphones and gaming consoles are all powered by semiconductors, tiny silicon chips smaller than a fingernail, which often take weeks, even months to be fabricated.

The semiconductor market is produced projected to be worth $1 trillion by 2030. Currently, a large portion of global production is based in Taiwan and South Korea, making the supply chain vulnerable to geopolitical tensions. That China could be prepared to invade Taiwan by 2027.

So clearly there is urgency behind this. Mr. Kanazashi. Japan dominated the chip industry back in the 1980s, 1990s, then it was overt rivals like South Korea, like Taiwan, and now it's kind of back with a vengeance betting big on semiconductors. Why is that?

During the, you know, time of COVID and also concerning the situation of the Russian invasion into Ukraine, disruption in semi supply chain happened which caused complicated situation to the public life in Japan. So there are many end products like cars or other electric devices like microwaves or etc. Didn't come to people's lives. So that's why many public people realize the importance of semi chip and that's kind of a trigger for us to push the semi industry.

Recent disruptions in chip supply rattled the Japanese economy. Its key manufacturing industries like cars, game consoles and robots rely on chips. Without them, production stops. So would you say that chip security is crucial for Japan's competitiveness? Japan's growth, Japan's economy going forward?

Toyota, Honda, Nissan, they are very important industries for Japanese economy. But we have to have kind of multiple heads to push the economic growth for the future. Again, considering the future course of the Japanese car industry, they have to make a challenge for autonomous driving. For example, in order to realize autonomous driving, they have to have the most advanced semi technology. In order to realize electrification, they have to accessibility to the power chip technology.

So in that sense, to have a semi industrial basis means we can have a kind of weaponized semi for such Japanese user industry to grow more.

Japan is not just playing catch up. It's also gunning to manufacture advanced semiconductor chips with 2 nanometer process technology which will be used in products like AI enabled smartphones, computers and self driving cars. This is a massive leap, so massive many experts think Japan will fail.

The first pillar of Japan's strategy was to attract the world leader in semiconductors, TSMC, to their shores. The joint venture is scheduled to begin mass production later this year, surprising market analysts. The second pillar and Japan's big hope is local company Rapid.

We do have some breaking news when it comes to Rapid US and what Japan's Ministry of Economy, Trade and Industry are doing to support the company. This is a Japanese. The two year old company aims to leapfrog generations of innovation and produced bleeding edge 2 nanometer chips in 2027. But you're also betting big on Rapidiz, which is, some people say a startup.

Japanese car industry must have kind of accessibility to most advanced semi technology, 2 nano, 1.4 nano to realize their most advanced business model, autonomous driving, electrification, etc. So that's why we decided to launch Project Rapidus. Without the advanced semi technologies in Japan, there is no future for user industries. Japanese car industry, Japanese robotics industries, there is no future for them. So that's why rapidus project, we think it's very critical to the future of the Japanese industry.

The drive to produce cutting edge chips is pulling in companies from across Japan. Success is a matter of national security. One company that's critical to its success is Preferred Networks, a Japanese tech startup which is already producing its own chips optimized for AI. Some say that Preferred Networks could be Japan's answer to Nvidia. What do you think?

Founded in 2014, this tech unicorn creates hardware for AI models used in robotics, drug discovery, autonomous driving and e-commerce. In 2024, it secured $463 million of private investment to develop their own semiconductors. Preferred Networks is confident of bringing its AI, chip design and supercomputer to market in a few years time. But for the Japanese tech unicorn to go further, it needs an ecosystem of partners like advanced semiconductor manufacturers in Japan.

Mr. Nishikawa, how do you think Japan's semiconductor industry would look like in five years?

This semiconductor renaissance is happening far away from Japan's economic center, Tokyo. Instead, it's being built in places like Hokkaido and and Kyoto, areas more famous for their scenic beauty and ancient history. Beyond the temples and palaces of Kyoto are the foundries of semiconductor companies like Screen Holdings. Screen holdings designs and builds machines that clean chips, a process critical to the manufacturing of semiconductors.

I wonder what the private sector thinks of the Japanese government's ambitious plan to revive the semiconductor industry. How much has the ecosystem improved given the funding from the government?

Overseas competition, technological changes, not enough skilled workers. These are just some of the challenges Japanese semiconductor businesses face. We know that most of your clients come from China. The demand comes from China, 40, 50% in fact. And the demand is from the auto industry in particular.

With Japan looking at a 2 nano chip, really high tech, how are you positioning to cater for that? So you are prepared and in a position to cater to the demands in Japan when it goes to 2 nano. And in terms of demand for the future, where do you see it coming from?

The US announced billions of dollars in subsidies to grow its semiconductor market. China is doing the same. Can Japan, with its much smaller economy, really hope to compete with everyone getting mobilized to fulfill this semiconductor dream? Can Japan be one of the top players in semiconductor? Okay, don't ask me that. It's very difficult to say so.

I hope so. But it's very. I think we are challenging the target Taiwan transformation in the way that Japan's private and public sector think, talk and dream about its chip. Ambition is the name of the game. And it's nowhere more evident than in the formerly quiet town of Kikuyu in Kyushu island. Gsm, a joint venture between Taiwan chip giant TSMC, Sony Semiconductor Solutions and Denso, completed their first fab this year and has announced another on the way.

It's aiming to produce advanced chips for smartphones and AI applications. What role did Sony play in getting TSMC to Japan? Sony hopes its partnership with JESM will benefit its development of image sensors for smartphones and self driving cars.

What can be expected of EVs in five years with your image sensing technology? While the presence of GASM has boosted the economy in Kumamoto, Questions have emerged about the long term viability of this push to turn Kyushu into Japan's own silicon Valley. You talked about the challenges.

What's the biggest challenge you have to overcome? Kikuyo's 44,000 strong population is set to grow with JASM's two plants bringing in an influx of foreign staff. In 2024, 750 Taiwanese workers and their families moved into town and nearby areas like Kumamoto City. Semiconductor manufacturing requires lots of land and water, which Kikuyo has, but careful management is required to balance the needs of the town's residents with the demands of Jasm's operations.

The key to the next wave of cutting edge technologies is undoubtedly semiconductors, and Asia is at the forefront of fabricating the world's tiniest chips. With the ambitious strategy to lure foreign investment and develop local capabilities and deep pockets to fund research as well as foundries, Japan is set. JSM is planning to begin mass production soon, while RAPID is scheduled to open a pilot FAB next year. Once considered unlikely, Japan's push to reclaim its past glory in semiconductors seems to be gathering momentum.

On my journey across Asia in search of the brightest sparks, many burning questions have been answered. But now one question remains. Which cutting edge technology will next take the world by storm? This is momentum SA.

TECHNOLOGY, GLOBAL, INNOVATION, SEMICONDUCTORS, JAPAN CHIP INDUSTRY, AI CHIPS, BLOOMBERG ORIGINALS