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Japan chip industry needs to 'refocus'

Posted: 12 Oct 2011 ?? ?Print Version ?Bookmark and Share

Keywords:manufacturing? chip industry? semiconductor?

Although Japan still holds considerable power and influence in some sectors of the global semiconductor industry, the country's own has been suffering for more than two decades. This is according to Junshi Yamaguchi, former chair of Renesas Electronics Corp., who gave a presentation in the International Electronics Forum. He added that for the industry to rise again, it needs to refocus and identify key technology areas.

Yamaguchi, who serves as special advisor to Renesas and as chair of Japan Semiconductor Industry Association, said that the tragedy of the Japanese earthquake and tsunami of March 2011 could yet prove to be a turning point for the country and its remaining chip manufacturers.

According to him, the decline of the Japanese chip industry as a percentage of the global output went from 51 percent in 1988 to 44 percent in 1994 to 29 percent in 1998 and to just 20 percent in 2010. In the 1970s, Japan had decided to invest in DRAM production. Increasing sales of PCs in the 1980s drove DRAM consumption resulting in high volumes and revenues for many Japanese chip companies, Yamaguchi explained.

The turning point was political intervention by the U.S. that led to the signing in 1988 of U.S.-Japan Semiconductor Agreement in 1988. Under the agreement, Japan agreed not to sell DRAMs at below cost and to raise the U.S. market share in the Japanese chip market from the prevailing 10 percent to 20 percent. "Limits on Japanese capex and imports helped create South Korea as a force [in DRAMs and semiconductors]," continued Yamaguchi.

However, Japan continued to be too conservative, he added. Its problems continued when, having been largely forced out of DRAMs, it stayed focused on ASIC production for too long. "In the 2000s, there was a strong market for SoCs. That is ASSPs rather than ASICs." During this time, there was rapid growth in foundry," he noted.

semiconductor market share

The graph shows Japan's declining global market share.

"Japan has to change," Yamaguchi opined. He sees some evidence for that happening, starting with the response to the earthquake and tsunami that devastated his country. "Renesas made an incredible effort to recover its manufacturing within three months, not six or nine months." He said this shows what can be achieved when people come together on a mission and are prepared to work weekdays and weekends until the goal is achieved.

Japan needs to focus on MCUs, NAND flash memory and CMOS sensors, Yamaguchi asserted. With much of the global economic growth nearby in Asia, Japan is well placed to compete in the many applications that will demand hardware and software solutions such as mobile CEs, sustainable and energy-related development, healthcare and security.

"We had a lot of issues in our past but we have recognized where we should go," Yamaguchi concluded.

- Peter Clarke
??EE Times

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