China’s success in using industrial policy to expand its economy and finance green manufacturing has helped spark fierce competition among nations to develop and protect their own businesses.
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It has been 40 years since such competitive anxieties prompted this kind of acceptance of government intervention among major free-market economies. But at the time it was Japan, not China, that was the source of the unrest.
But Japan began a long economic decline after the collapse of the real estate and stock bubbles. Now, after a period of stagnation that Japan’s Ministry of Economy refers to as “the three lost decades,” Tokyo is focused on a multibillion-dollar industrial policy to revive the lackluster economy and regain its position as a technological innovator.
To achieve this, Japan is working with technology leaders in the United States and other countries—a collaborative approach that decades before would have been inconceivable.
Tokyo’s industrial policy focuses on advanced technologies, but the priority is to recover a greater share of the global semiconductor industry, for which the Japanese government allocated more than 27 billion dollars in the last three years.
“In the future, the world will be divided into two groups: those who can supply semiconductors and those who only receive them,” said Akira Amari, a senior official in Japan’s ruling party who previously headed the Ministry of Economy, Trade and Industry. “Those are the winners and the losers.”
The centerpiece of Japan’s new industrial push is taking shape at a construction site on Hokkaido, its northernmost island. Rapidus Corporation’s new semiconductor plant, funded in part by billions of dollars in government funding, is being developed through a collaboration between Rapidus, a Japanese chip manufacturing startup, and the American IBM. It will produce two-nanometer chips, a technology that IBM pioneered in its Albany, New York, lab.
El País courted Taiwan Semiconductor Manufacturing Company, the giant chipmaker, to build a plant in the southern town of Kikuyo with investment from domestic companies including Sony. The factory, partly financed by the Government, opened in February.
Skeptics in Japan have criticized the Rapidus plant for its ambitious schedule and its inability to attract more private sector investment. But Amari maintains that there is no alternative.
“Not addressing semiconductors now means you will be in the losing pool from the start,” he said. “Japan will never choose that.”
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