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Japan's once-proud semis learn size DOES matter

Struggling chip fabs refused to go sub-28nm

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Japan’s creaking semiconductor industry is struggling to stay relevant on the world stage and may face extinction if it can’t make a name for itself in the cutting-edge sub-28 nanometer manufacturing space, according to analysts.

Market watcher IHS iSuppli is arguing that the damage was done to the country’s once proud semiconductor industry long before the twin disasters of massive earthquake and tsunami destroyed much of the Tohoku coast last March and halted production for weeks.

In fact, as The Reg reported earlier this month, the global supply chain was remarkably unaffected by the disasters, and production is pretty much back to normal now in most plants.

“The limited impact of the quake on the global semiconductor industry dramatically illustrated Japan’s diminished status in the worldwide chip hierarchy and underscored the pressing need for the country to revitalise its business in this area,” said IHS chief analyst Len Jelinek.

IHS argues that despite the fact that something like 70 per cent of the world’s silicon wafers are being produced in Japan, the country’s home-grown semiconductor firms are struggling. It said that the share of global semiconductor revenue held by suppliers headquartered in Japan has dropped from a sizeable 27 per cent in 2003 to less than 19 per cent last year.

It goes on to say that Japan is suffering because its manufacturers have largely resisted investing in new state-of-the-art facilities or outsourcing production.

The country now plays host to the smallest number of number of advanced 300mm wafer fabs and the largest number of mature 6 inch wafer fabs, and faces an uphill struggle if it is to transition to the sub-28nm production increasingly demanded by chip companies, said IHS iSuppli.

Even a plan which emerged last month to consolidate the manufacturing facilities of semiconductor giants Renesas, Fujitsu and Panasonic to revitalise wafer manufacturing will struggle to turn things around, said the analyst.

We wrote earlier this month how the natural disaster of 2011 has spurred some Japanese semiconductor firms to speed up their offshoring plans.

Well, from iSuppli’s point of view it looks like this will need to be twinned with a change of focus towards the more advanced, cutting edge of manufacturing in this space if these firms are going to thrive in the future. ®

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