As international businesses include Japan in their supply chains for essential components, a new wave of investment is being attracted to the country.
Modern global supply chains span several nations and continents, boosting business competitiveness and bringing down prices for consumers.However, there is a drawback to long supply chains: they are susceptible to disruption.The Covid-19 outbreak, the turmoil in Ukraine, and other events are driving inflation and forcing businesses and governments to reevaluate how and where products are created, making supply chain risks more evident than ever. In May, the leaders of the Group of Seven made a commitment in Hiroshima, Japan, to strengthen resilient supply chains through global alliances, particularly for essential products such vital minerals, semiconductors, and batteries.
More than just short-term economics are at risk. Industries that are essential to human well-being, such as green technology, medicine, and artificial intelligence, must have access to essential resources and components and semiconductors.
Balancing efficiency and resilience means looking at supply-chain investments through an updated lens, one that brings matters like political stability, the rule of law, and a commitment to universally accepted trade standards into closer emphasis.
Japan is one nation that is currently receiving new attention as a result of this change.
Politically and economically secure, and noted for its brilliant and highly educated population as well as for the strength of its R&D centers and the quality of its products, Japan is drawing a fresh wave of investment as global firms incorporate it into their supply chains for crucial components. Getting government backing is appealing: The new semiconductor growth plan for Japan, which was unveiled in June, seeks to boost the overall sales of businesses that produce chips in Japan to 15 trillion yen by 2030.
Around the world, investment is coming in. In the middle of the island of Kyushu, in the city of Kumamoto, Taiwan Semiconductor Manufacturing Company (TSMC), is constructing a production facility and debating the addition of a second*. Micron Technology announced in May that it would invest an additional 500 billion yen (3.65 billion dollars***) in Japan to support the development of next-generation chips, in addition to the sizeable long-term investments it has already made over the past ten years, following a meeting between semiconductor executives** and Prime Minister Fumio Kishida.
