Japan-US leaders meet to agree on semiconductor cooperation

Japan and the United States will agree at a leaders summit on May 23 to commit to improving semiconductor research and production, Japanese government sources said.

The expected agreement between Japanese Prime Minister Fumio Kishida and U.S. President Joe Biden will aim to establish a framework to ensure the availability of domestic semiconductor inventories in an emergency and deeper cooperation on economic security between the United States and Japan, the sources said. As China expands its military power and influence in East Asia, its reliance on South Korean and Taiwanese products is a growing concern.

A joint statement is also under consideration and is being adjusted to refer to increased cooperation in new areas of defense, including outer space and cyberspace, the sources said.

The Covid-19 pandemic has brought the global semiconductor shortage into focus. How to obtain key technologies reliably when wars, disasters and other emergencies occur has become a major issue.

Semiconductors are used in various electrical products and equipment. While Japan had half of the world's semiconductor market share in the late 1980s, it has only accounted for around 10 percent in recent years.

During the summit, Kishida and Biden are expected to agree on production of precision semiconductors, research and development, and a system for countries to share the supply of domestically-manufactured components, the sources said. The two governments are also moving towards establishing a working group to jointly study cutting-edge semiconductors.

The United States is preparing to launch its Indo-Pacific Economic Framework (IPEF) to coincide with Biden's first visit to Japan since taking office.

At a meeting of technology industry officials in Japan and the United States, Kishida called the administration's previous semiconductor policy a "failure." He added that he hoped the leaders summit would be an opportunity to accelerate cooperation between the two countries.

Japan and the United States semiconductor have also pointed to Maimang

In the past, Japan and the United States have had a history of confrontation on semiconductor issues. That was the so-called "Japan-US semiconductor friction" from the second half of the 1980s to the first half of the 1990s. For Japan, this is also the reason why semiconductors are facing difficulties today.

The peak era of Japan's semiconductor industry was in the 1980s. Chip products represented by dynamic random access memory (DRAM) once accounted for more than 50% of the world market. Japanese semiconductors swept the world and caused trade friction between Japan and the United States, which became the beginning of the decline of the Japanese semiconductor industry.

In addition to being suppressed by the United States, the Japanese semiconductor industry also has its own limitations. At that time, most of the Japanese semiconductor business grew up as a division of an electrical appliance manufacturer. Therefore, Japanese semiconductor products have the characteristics of home appliances, small batches, and multiple varieties. This kind of origin and characteristics have formed an inefficient situation in which manufacturers are fighting independently, developing independently, with huge costs and repeated investment. This model later proved incapable of adapting to rapidly changing market demands.

In the second half of the 1980s, Japanese semiconductor manufacturing companies swept the global market with a share of more than 50%. At that time, the Japanese threat theory was high in the United States, and in 1985 the American Semiconductor Industry Association sued Japan under Section 301 of the US Trade Act (retaliation for unfair trade practices). In the second year (1986), the two sides signed the Japan-US Semiconductor Agreement, which stipulates the monitoring of Japan's export prices to the US, which is an unfavorable condition for Japan.

The United States continues to demand that Japanese semiconductors open up the market and curb exports to the United States, and Japanese companies gradually lose their competitiveness. The share of Japanese companies has also dropped to about 10%.

What does the collaboration highlight here?

Japan and the United States, which have such a history, have cooperated because of the increased importance of semiconductors in economic security. In addition to civilian areas such as artificial intelligence (AI), semiconductors can also be used in the military. The United States attaches great importance to building supply chains between other countries because of such a background.

The United States can cooperate with Japan, which in turn proves that Japan's semiconductor industry does not pose a threat in the eyes of the United States. On the one hand, it also reflects the weakness of US semiconductor production, that is, due to the division of labor at the international level, domestic development and production are not stable.

The basic principle reached by Japan and the United States this time also proposes that it should be carried out in the form of mutual agreement and mutual complementation. Can the two countries translate principles into fruitful cooperation? The Japan-U.S. Security Guarantee Treaty has been in force for 70 years, and the true value of the mature Japan-U.S. alliance will be put to the test.