Joseph Negrine
In the new age of industrial policy, advanced economies are driving public–private partnerships and abandoning notions of laissez-faire competition. As of September 2024, the Japanese government has spent over US$25 billion on subsidising semiconductors, the ‘new oil’ integral to civilian and military technologies. While the potential economic gains from Japan’s semiconductor manufacturing revival are colossal, Japan must not overlook the potential negative economic and security externalities.
Semiconductor dominance is a crucial aspect of geopolitical and economic superiority in the US–China ‘technological cold war’. Global disruptions like the Russia–Ukraine war and the COVID-19 pandemic have underscored the need for resilient supply chains. In 2021, chip shortages that increased semiconductor lead times cost the global automotive industry over US$200 million. The United States is attempting to stifle China’s semiconductor industry through coordinated export controls with the Netherlands and Japan. Both countries are crucial because they specialise in producing lithography equipment and associated materials that are chokepoints in China’s chip supply chain.
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