Japan will tighten control over the national semiconductor industry

Japanese authorities have decided to apply foreign trade regulations to chip manufacturing equipment as part of their initiative to ensure stable supply chains, Bloomberg reports, citing a statement from the country’s Ministry of Finance.

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Foreign investors are now required to provide advance notice when making direct investments in equipment related to the production of semiconductor products, including when acquiring 1% or more shares of a company whose securities are traded on an exchange or not listed, the department said in a statement. The move also aims to eliminate the risk of technology leakage and prevent civilian commercial technologies from being used for military purposes.

The list of “major business sectors” also includes advanced electronic components, machine tool components, marine engines, fiber optic cables and multifunctional machines. These additions will help cover all critical products under the Economic Security Act, the department said. The new measures will help the government strengthen Japan’s national security, and their impact on business will be insignificant, the Ministry of Finance added.

Japan is seeking to revive its own semiconductor manufacturing capacity as a pillar of its economic security strategy. Over the past three years, the country’s authorities have allocated about 4 trillion yen ($26.9 billion) to support the semiconductor sector and digitalization. A legislative framework is being developed to further increase investment in chip production in the country. Significant subsidies were provided that helped attract TSMC, the world’s largest semiconductor contractor, to the country. Previously, the Japanese authorities did not succeed in reviving the sector because they avoided cooperation with foreign companies, experts believe.