In the United States, President Joe Biden is preparing to sign an executive order for a review of the semiconductor supply chain. Lawmakers in the country have been campaigning to increase domestic production under the slogan "CHIPS for America." As an incentive, they're offering up to three billion dollars to each company that build a factory in the United States.
The world's largest contract chipmaker, Taiwan Semiconductor Manufacturing (TSMC), appears to be on board. It plans to seek federal subsidies and build a plant in Arizona.
US lawmakers are also keen to work with the country's allies under a so-called "multilateral semiconductor security fund." Those that join could be pressured into restricting exports elsewhere – most notably to Washington's biggest rival, China.
But Beijing has been making a few moves of its own, including an investment of about 50 billion dollars to secure workers from overseas to produce "made in China" semiconductors. And President Xi Jinping has ordered a special entity list for businesses deemed unfavorable to China. The move is seen as a way of pressuring those who side with the United States.
Japan, on the other hand, has been forced to take a more limited approach, in part because the funds it has earmarked for semiconductor development amount to just one-tenth of what the US and China are spending. Although the country is no longer a chipmaking powerhouse, it is still is a global leader in the fields of silicon wafers, equipment for producing semiconductors, and the chemicals required for processing.
Over the past two years, government officials have been striving to attract overseas suppliers to build plants in Japan. They're touting the plan as a win-win situation.
TSMC recently announced that it will establish a research center in Tsukuba City near Tokyo by the end of the year. The company plans to expand its development of advanced semiconductors – a move that could foster close collaboration with some of Japan's biggest end users, such as Toyota and Sony.
Japanese firms would be able to submit ideas for new products to TSMC, potentially resulting in more cutting-edge semiconductors. And that innovation may be exactly what the country's automakers need as they deal with the shift toward digitalization and decarbonization, for greener car components, and self-driving vehicles.