Japan's Semiconductor: Mini Wafer fabs （Part I）

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2023-09-25 16:44:05 1109

Is it true that Japan's semiconductor companies lag far behind those of other countries, particularly those represented by South Korea's semiconductor industry, due to factors such as poor management by Japanese companies and ineffective policies of the Japanese government?

Looking back at history, it is true that there was a time when Japan's semiconductor industry dominated the global market. In 1986, which was 37 years ago, the top three global semiconductor sales rankings were occupied by NEC, Hitachi, and Toshiba. Additionally, companies like Fujitsu, Panasonic, and Mitsubishi Electric also performed exceptionally well, making Japan the undisputed leader in the global semiconductor industry.

However, there were some "unpleasant events" that occurred later. For example, after World War II in 1945, Japan's aviation industry, which had once created the Zero fighter aircraft, was forced to dismantle. The United States even led efforts to "destroy Japanese automobiles" and exerted pressure on Japan's once prosperous industrial technology and industries. For many years, the United States posed a continuous threat to Japan.

At that time, Japan indeed posed a security threat to the United States. In 1971, the global semiconductor sales rankings were as follows: Texas Instruments (TI) was ranked first, Motorola was ranked second, and Fairchild Semiconductor was ranked third, all of which were American companies. Since Japan surpassed the United States in just 15 short years, the "Japanese threat theory" began to spread.

Despite facing control from the United States, in 1989, the top three positions in the global semiconductor sales rankings were still occupied by NEC, Toshiba, and Hitachi. Because Japanese companies were not "defeated," Japan and the United States concluded the "Second Semiconductor Agreement" in 1991.

Even the strongest Japanese companies could not resist the second wave of pressure from the United States. Finally, in 1992, the top position in global semiconductor sales was relinquished to the American company Intel.

In contrast, the South Korean semiconductor industry, which was not threatened by U.S. pressure, experienced rapid development. According to reports, in 1998, the annual sales of South Korean and Japanese semiconductors were almost equal. In line with the United States' desires, Japan's semiconductor industry was defeated.

However, Japan did not collapse under the pressure exerted by the United States.

Renowned materials and equipment worldwide

After World War II, the United States was concerned about Japan's Zero fighter aircraft and was determined to destroy them, but Japan's aviation industry was not completely defeated. Honda Jet and Mitsubishi Space Jet (MRJ) managed to survive. In the global large aircraft market, Boeing from the United States and Airbus from Europe dominate overwhelmingly.

However, the aforementioned aircraft carry many components from Japanese manufacturers. In addition, besides aircraft, the contribution of Japanese companies to other manufacturing industries such as the automotive industry should not be underestimated. Japan shifted its resources from the aviation field to many other areas represented by the automotive industry and achieved great success.

In the semiconductor industry, Japanese companies continue to adopt a "support from behind" policy, which means avoiding the "dazzling" finished product market and focusing on the "back-end market" such as equipment and materials.

As is well known, in the silicon wafer field, which is the foundation of the semiconductor industry, Shin-Etsu Chemical and SUMCO from Japan hold the top two positions with more than 50% market share. Additionally, as you may have seen in the news, the United States controls the export of advanced semiconductor production equipment to China and also requires the Netherlands and Japan to synchronize with the United States. Currently, advanced semiconductor production equipment is dominated by Japan, the United States, and the Netherlands. Furthermore, Japanese companies account for four out of the top ten manufacturers globally.

"Production equipment=operating machinery" and "components & materials" are essential for producing semiconductor equipment.

According to the November 28, 2022 edition of the "Global Job Equipment Manufacturer Ranking TOP10," Japanese companies occupy five out of the top ten positions in global industrial equipment. Chinese and Korean manufacturers have also made it to the top ten, but there are hardly any manufacturers that can compete with Japanese companies in terms of high-precision equipment.

In addition, Japanese companies have performed extremely well in certain specialized fields.

For example, Japanese companies have almost 100% market share in the field of photoresist, mask blanks, and mask inspection equipment. Moreover, they have a strong advantage in areas such as photomasks, pellicles for mask protection, photomask inspection equipment, and EUVL direction silicon wafers.

Furthermore, Japan's previous export restrictions on three semiconductor materials, namely "fluorinated polyimide," "photoresist," and "high-purity hydrogen fluoride," almost shocked the entire South Korean semiconductor industry.

Although South Korea once advocated localization, four years have passed and they still cannot produce products with a purity of 99.9999999999% (12 nines). As Reuters reported on March 16 this year in an article titled "Japan lifts export restrictions on semiconductor materials to Korea, Korea withdraws WTO complaint," the Japanese government has "given face."

BS World published an article on January 10, 2020, titled "Liquid Hydrogen Fluoride~Japanese Government Allows Export After Half a Year," and pointed out that companies like Morita Chemical and STELLACHEMIFA CORPORATION from Japan have an 80% to 90% market share in high-purity liquid hydrogen fluoride.

On July 3, 2019, Reuters disclosed an article titled "Materials Restricted by Japan's Export to South Korea and Their Importance," stating that Japan produces approximately 90% of the world's fluorinated polyimide, 70% of etching gases, and 90% of photoresists.

However, the advantage of Japanese materials is not limited to the aforementioned three types. According to an article in Japan's Electronic Device Industry News on July 7, it is pointed out that Japanese companies provide over half of the world's semiconductor materials.

To be continued...

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Next:: Japan's Semiconductor: Mini Wafer fabs （Part II）

Japan's Semiconductor: Mini Wafer fabs （Part I）

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