Japan aims to expand domestic semiconductor production; Local governments anticipate economic benefits from plants

In an effort to strengthen supply chains and economic security in the wake of the global semiconductor shortage caused by the COVID-19 pandemic, the government is encouraging companies and other organizations to expand domestic semiconductor production. Plans to build factories for semiconductor industries have been mapped out across the country.

A wide range of companies support the semiconductor industry, and local governments expect positive ripple effects from these initiatives.

Construction boom

A plot of land on the east side of New Chitose Airport, a gateway to Hokkaido, was recently filled with cranes. A factory is being built there at a rapid pace for Tokyo-based chipmaker Rapidus Corp.

Rapidus was founded in 2022 and is funded by major Japanese companies. It also receives financial support from the central government.

In February last year, Rapidus announced it would build a factory in Chitose, Hokkaido, to mass produce next-generation chips with a circuit line width of 2 nanometers. The company plans to begin operating a prototype production line at the factory in April next year, in preparation for full operations to start in 2027.

It is expected that around 1,000 workers will live in Chitose when work at the factory starts, so apartments are being built in the center of the city. About 40 building permits for apartment buildings were issued in the city in fiscal year 2023, more than double the number the year before.

“We decided to enter the Hokkaido market after seeing the construction boom in Kumamoto Prefecture that occurred after Taiwan Semiconductor Manufacturing Co. moved to the area,” said Masahiro Otsuka, president of Well Holdings Co., a real estate development company in Fukuoka City. which is building a rental apartment building in Chitose.

Construction of the plant has also created cleaning, security and other jobs. The Chitose Chamber of Commerce and Industry, which serves as a point of contact for relevant business and other activities, has received a number of questions regarding Rapidus.

The number of special members of the chamber – entrepreneurs based outside the city – increased from 26 at the end of March 2023 to 46 at the end of March 2024.

Land prices are also rising. According to official March values ​​released by the Ministry of Land, Infrastructure, Transport and Tourism, four of the 10 rural locations where the largest increase in residential land prices occurred were in Chitose.

Three of the ten commercial plots with the highest increase in land prices were also in the city.

“Partly because of the high cost of materials, it is becoming difficult for the general public to buy real estate in the city,” said a president of a real estate company. Chitose Mayor Ryuichi Yokota said in May that the city wants to continuously supply housing as needed so that there will not be a shortage of plots.

Newly established positions

Leading Taiwanese semiconductor contract manufacturer Powerchip Semiconductor Manufacturing Corp. (PSMC), in partnership with Tokyo-based major securities house SBI Holdings Inc., plans to start operations in 2027 at a new factory in Ohira, Miyagi Prefecture.

The village of Ohira is home to Toyota Motor East Japan Inc., and the area is home to many automotive-related companies. Since the automotive and semiconductor industries have common ground, local governments in surrounding areas are establishing new departments or positions to support the semiconductor industry to take advantage of this opportunity.

In December, the Miyagi Prefectural Government established a seven-member office to promote the semiconductor industry, and on May 2, Miyagi Governor Yoshihiro Murai attended the opening ceremony of a new factory built by PSMC in Taiwan.

Murai appeared impressed by the size of the new factory, which will serve as a model for the Ohira factory. “We need to provide significant support” to the prefecture’s semiconductor industry, he said.

The city of Sendai has also created a new department head post responsible for semiconductor industries from June 1. The city will promote studies as well as sales and marketing activities to attract related companies to the city, taking into account that a factory office will be opened in Sendai as early as July.

“We want to maximize economic benefits for the city,” said Tomoyuki Goto, department head of the city office.

Kenji Nakamura, director of the Kushiro Public University Research Center for Regional Economics at the Kushiro Public University of Economics, said: “Local governments should focus on measures that involve related industries, such as the development of communications infrastructure for information technology companies, which are closely linked to the semiconductor sector.”

“The influx of talented people from Japan and abroad will also make it necessary to create a city where they can live comfortably with their families. This is an excellent opportunity to improve the quality of education, leisure and other activities in the affected areas,” said Nakamura.