Two Tokyo Olympics Show Long Arc of Japan’s Tech Decline
When Tokyo last hosted the Olympics in 1964, the unveiling of a high-speed train capable of reaching the unlikely speed of 210 kilometers per hour heralded the dawn of a high-tech era. in Japan.
Within a decade and a half, innovations such as Sony’s VCR, Toshiba flash memory and Space Invaders, the arcade shoot-em up that revolutionized the gaming industry, made Japan a synonym of global technological superiority, and there was talk of overtaking the United States. as the world’s largest economy.
Today it seems like another age.
As Tokyo prepares to host the Games again this week, Japan is in a technological funk. Its heyday for setting the tone in televisions, recording devices and computers is far behind it. While Japan can claim credit for the Walkman, Apple Inc has come up with the iPhone. Even more humiliating, regional rival South Korea and its tech giant Samsung Electronics Co have overtaken Japan in smartphones and memory chips.
It is not simply a blow to Japanese national pride; It’s a corporate dilemma and an economic responsibility just as a fourth wave of COVID-19 robs the country of Olympic spectators and the revenue they would bring to help spur a rebound in the pandemic. In an increasingly polarized world where the United States and China set standards for technology and data, Japan runs the risk of being left behind.
Prime Minister Yoshihide Suga is fighting back, with plans to strengthen the computer chip industry as a national project alongside food and energy security. But industry leaders and government officials say the solution will also require something else: a fundamental change in the way Japan has done business for decades.
It means cutting red tape, recruiting foreign chip-making talent and completely abandoning “a stubborn emphasis on Japan-centrism,” said Kazumi Nishikawa, director of the IT division of the Ministry of Economy, Industry. and Commerce, known as METI.
“This made-in-Japan approach to autonomy has not worked,” he said. “We want to avoid that this time around. “
Japan may have taken a big step in this direction by getting Taiwan Semiconductor Manufacturing Co to help it rebuild its once dominant chip industry. Last week, CEO CC Wei (魏哲 家) surprised observers when he said TSMC was performing ‘due diligence’ on a wafer manufacturing plant, appearing to confirm long-standing speculation about the world’s leading manufacturer. of advanced chips to build a factory in Japan. .
Japan, the world’s third-largest economy after the United States and China, is budgeting hundreds of billions of yen to make crisps, but that’s a drop in the ocean compared to the kind of money that is stirred in the United States, where at least US $ 52 billion is being made available to support domestic semiconductor production. In South Korea, companies like Samsung and SK Hynix are pledging US $ 450 billion over a decade, while TSMC alone is forecasting US $ 100 billion over the next three years.
“Some countries offer support of a different order of magnitude,” making it difficult to compete, said Akira Amari, tax chief of the ruling Liberal Democratic Party and former minister of state for economic and fiscal policy .
Still, he said, the prime minister is “extremely good” at getting things done and is now focusing on digitization and carbon neutrality, two issues related to semiconductors.
Japan still has pockets of excellence in areas such as robotics and supercomputers, while Japanese engineers have just broken the world record for the fastest internet speed, according to a report released last week on interestingengineering. com. In the White House supply chain review published last month, Japan is mentioned 85 times, just ahead of Taiwan and South Korea, and the same number of references as Europe.
Tetsuro Higashi, chairman emeritus of semiconductor equipment maker Tokyo Electron Ltd, said the task of tackling Japan’s decline is not as simple as rebuilding an industry. He cited Japan’s semiconductor strengths like Kioxia for Sony’s memory and image sensors, as well as power chip and component manufacturers and chip-making equipment, saying that ” strategy must connect these pieces and form a nucleus “.
“There is a more fundamental sense of crisis,” said Higashi, who heads a panel of experts advising the government on its chip strategy, in an interview. “The fear is that if this goes wrong, the entire Japanese economy will suffer.”
Like all of the world’s most advanced nations, Japan’s technological shortcomings have been exposed by the pandemic. Its recognition in Washington belies a decline in technological influence for various reasons, political, economic and cultural.
Take semiconductors, the current government’s goal: in 1990, Japan had about 50% of the global chip market; it’s now 6 percent, according to IC Insights. Analysis of scientific papers submitted to major semiconductor conferences conducted by Berlin-based think tank Stiftung Neue Verantwortung shows steep decline in Japanese contributions over the past 25 years, as China overtook it Last year.
“The decrease in market share seems to go hand in hand with a decrease in R&D power,” write SNV researchers Jan-Peter Kleinhans and Julia Hess in their report: “Who is developing the chips of the future? “
In a devastating presentation to the lower house’s science and technology committee last month, independent consultant Takashi Yunogami exposed Japan’s failures. Japan used to manufacture memory for mainframe computers, where customers demanded high quality and a 25-year warranty. But with the rise of personal computers, the Japanese industry did not respond, leaving Samsung to offer PC memory with a three-year warranty at a fraction of the cost. In an increasingly disposable digital age, Japan has suffered from a “high quality disease”.
The industry’s problems were compounded by a government response that favored the creation of national champions rather than foreign collaboration. In 1999, Tokyo encouraged the merger of the memory activities of Hitachi and NEC under the name Elpida, the Greek word for “hope.” In 2012, it filed for bankruptcy with liabilities of $ 5.5 billion, a victim of falling prices. It was purchased by Micron Technologies of the United States.
Like other officials, however, he saw a silver lining in Japan’s share of the global market for chip equipment and raw materials, which translates into thousands of small companies making products like this. than platelets and specialized fluids. The government’s best chance is to focus on those few successes and “make the strong stronger,” he said.
Government intervention in the chip industry helped establish its dominance in the first place. You talk about government aid today is poison to some in business, illustrating Suga’s difficulties in securing support for a technological revival.
There is another reason cited by Japanese authorities for the country’s relative decline that would seem familiar to Chinese observers: a trade war with the United States. About 40 years ago, spooked by the rise of Japan, the United States imposed an obligation to use a certain percentage of American chips or face commercial tariffs.
“America saw the emergence of Japan as a threat and pushed it back,” said Amari, the ruling party’s tax chief. Yet the Japanese industry was also guilty of complacency, content to focus on the domestic market without venturing into the world, he said, citing the downfall of Docomo, the first company to connect cellphones. to the Internet. He lost to Samsung and Apple.
Today, technology-related national security concerns mean the government is facing “the kind of change that happens once every hundred years.”
That means he has to rise to the challenge or fall behind, he said.
“Japan is good at taking things from zero to one, and not so good at taking them from one to 10,” he said. “Japan is gaining in technology and losing in business. “
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