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Chip Production Shifts Away From Traditional Strongholds

This article is published in collaboration with Statista

by Katharina Buchholz

The Japanese government under Yoshihide Suga has announced that it is looking to bolster the country’s lagging semiconductor industry. In a first step, chip manufacturing has been elevated to a national priority similar to food or energy production, Bloomberg reports.

Semiconductors have come back into international focus after shortages, aggravated by the COVID-19 pandemic, shone a spotlight on the crucial part computer chips play for many major industries, for example car manufacturing.

Data from Boston Consulting Group and the Semiconductor Industry Association shows how much chip production has moved away from its traditional strongholds – among them Japan - in the last decades. In 1990, Japan, Europe and the U.S. dominated semiconductor manufacturing, but with South Korea, Taiwan and finally Mainland China entering the market, the three initial manufacturing locations were reduced to a combined market share of only around 35 percent in 2020. The decline is projected to continue, if more slowly, until 2030.

According to the Bloomberg report, Japan still has some areas of expertise, for example in robotics and supercomputers, but others have started to lead in different areas of technology as the country has struggled to keep up with innovation in the multifaceted field of semiconductor products. While Japanese products continue to cater to specialist and high-quality needs, cheaper and more ubiquitous chips are now manufactured elsewhere as Japan failed to keep up with shifting demand. While the U.S. and European countries similarly hold on to expertise in certain fields, the manufacturing power of newer Asian players poses identical challenges as to regional legacy producer Japan.

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