New Trade Rules for Chipmaking Equipment

Japan has implemented stricter rules for foreign investment in chipmaking equipment to bolster supply chain stability, according to the Ministry of Finance. Effective immediately, foreign investors must inform the government before making direct investments in chipmaking equipment, including acquiring a 1% or greater stake in publicly listed companies or purchasing shares in private companies. This measure aims to minimize the risk of technology leakage and prevent the misuse of commercial technologies for military purposes.

Core Business Expansion and Security Measures

Japan has expanded its list of “core business sectors” to include advanced electronic components, machine tool components, marine engines, fiber optic cables, and multifunctional machines, in addition to chipmaking equipment. This expansion ensures that all critical products under the nation’s Economic Security Promotion Act are covered. The finance ministry expects that while the new regulations will strengthen national security, they will have minimal impact on businesses.

Reviving Semiconductor Production and Partnerships

This regulatory move is in line with Japan’s broader strategy to revitalize its semiconductor industry, a key element of its economic security strategy. Over the past three years, Japan has allocated approximately ¥4 trillion ($26.9 billion) to rejuvenate its semiconductor sector and advance digitalization. The government is also working on legislation to further enhance domestic chipmaking capacity. Tokyo has actively sought to attract foreign companies, such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), with significant subsidies to boost local chip production. However, some critics argue that previous efforts failed due to a lack of collaboration with international firms.