Japan - Tech Wire Asia https://techwireasia.com/tag/japan/ Where technology and business intersect Mon, 08 Apr 2024 06:34:23 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.4 How Japan balances AI-driven opportunities with cybersecurity needs https://techwireasia.com/04/2024/the-future-of-ai-in-japan-opportunities-and-challenges-for-smbs/ Tue, 09 Apr 2024 01:00:49 +0000 https://techwireasia.com/?p=238616 For Japan, the integration of AI in various sectors shows a promising blend of innovation and caution. The significant shortage of cybersecurity professionals in Japan underscores urgent and strategic responses to this growing gap. Organizations and governments worldwide, including Japan, face the dual challenge of mitigating risks and embracing the rapid advancements in AI. This... Read more »

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  • For Japan, the integration of AI in various sectors shows a promising blend of innovation and caution.
  • The significant shortage of cybersecurity professionals in Japan underscores urgent and strategic responses to this growing gap.
  • Organizations and governments worldwide, including Japan, face the dual challenge of mitigating risks and embracing the rapid advancements in AI. This involves managing uncertainties while also accelerating innovation and adoption to reap the benefits of this transformative technology.

    Japan’s unique position in AI

    Although Japan is known for its cautious approach to risk, it is also renowned for its innovative contributions to technology, particularly in smart robotics and automotive AI. However, reports suggest that Japan’s prowess in AI-powered hardware does not equally extend to its software capabilities, making it reliant on foreign large language models for generative AI.

    Japan faces unique AI development and adoption hurdles, including limited data availability and cultural attitudes towards business risk. These factors complicate the integration of AI technologies within traditional business frameworks.

    A recent study by Barracuda, titled ‘SMB cyber resilience in Japan: Navigating through doubt to an AI-powered future,’ examines AI’s impact on small to medium-sized businesses (SMBs) in Japan. It reveals a mix of optimism about AI’s benefits and concerns about security, knowledge, and skill gaps.

    The research underscores general optimism among smaller Japanese organizations about the positive effects of AI on business operations. The majority of these businesses anticipate that adopting AI solutions will lead to workforce reductions over the next two years—66% foresee fewer full-time employees, and 70% expect to rely less on freelancers and contractors. This trend is expected to lower costs and reduce the human resource demands on companies, though it also highlights a precarious future for workers in roles vulnerable to automation.

    In addition to cost reduction, businesses expect AI to enhance operational efficiencies across various functions, including marketing and customer relations. Approximately 67% predict that AI tools will produce over half of their content soon, and 60% believe AI will become the primary interaction point for customers. Moreover, thanks to AI, 76% anticipate quicker and more accurate customer insights.

    Strengthening cybersecurity through AI

    On a broader scale, 65% of respondents are confident that AI tools can streamline their cybersecurity needs, reducing reliance on human security teams or third-party services. Given Japan’s acute shortage of cybersecurity professionals, integrating AI for automated threat detection and response is seen as essential for enhancing security across all business sizes.

    Most organizations recognize the need for external assistance to fully leverage AI for business benefits. A significant majority of businesses surveyed—76%—indicate the necessity of partners for researching and exploring AI. The same proportion (77%) seek help with implementing AI solutions and managing these technologies on an ongoing basis. Security vendors and managed service providers in Japan are well-positioned to help smaller businesses exploit AI’s advantages.

    The release of ChatGPT by OpenAI in November 2022 showcased the capabilities of generative AI tools in creating natural, engaging dialogues. Despite widespread attention, businesses exhibit cautious engagement with generative AI. Awareness does not equate to comprehensive understanding; 56% grasp the distinctions between generative AI and other AI types like machine learning, while 44% admit to limited or no understanding. Consequently, many Japanese companies impose restrictions on AI use due to potential risks.

    Approximately 69% of businesses perceive risks with workplace generative AI usage. While 18% permit its use—6% broadly and 12% in limited team settings—62% do not officially sanction it, suggesting covert use that may heighten security risks. Concerns also include data protection (57% of respondents), the absence of regulatory frameworks (47%), and opaque AI decision processes (31%). Additionally, 13% fear AI systems being compromised by cyber attackers.

    Risks of using generative AI

    Risks of using generative AI (Source – Barracuda)

    AI and cyber threat evolution

    There’s notable uncertainty about AI’s role in evolving cyber threats. About 55% of businesses are unsure how AI could be utilized in email attacks, with similar uncertainty extending to denial-of-service (62%), malware (57%), API attacks (56%), and cyber espionage (55%).

    Despite these uncertainties, email threats remain a prominent concern for Japanese small businesses, with 53% highlighting account takeover attacks as a top threat. This form of identity theft allows attackers to misuse accounts, potentially leading to phishing scams, data theft, and more. Other significant threats include phishing and social engineering (37%), with ransomware also critical (39% reported it as a top concern, predominantly initiated via email).

    Cyber threats concerning businesses in Japan

    Cyber threats concerning businesses in Japan (Source – Barracuda)

    Survey participants generally understand the role of AI in fortifying cyber defenses, especially in areas like email security and employee cybersecurity training. However, there’s some ambiguity about AI’s effectiveness in other domains, possibly due to these areas being less familiar to smaller enterprises.

    When asked which AI-enhanced security measures would improve their organizational safety, 36% pointed to AI-enhanced email security, especially against sophisticated threats like deepfakes. Another 24% believed AI could support more tailored, frequent training programs. The benefits of AI in continuous threat intelligence and response, as performed by Security Operations Centers (SOCs), were not as clearly understood.

    The survey reveals a deficiency in AI-specific practices and policies needed for responsible AI usage. While 52% of businesses conduct employee training on AI use and vulnerabilities, only 35% have formal policies dictating AI usage. Even fewer have comprehensive governance structures in place, such as legal frameworks. This indicates a lack of control and management over AI applications within businesses.

    The latest ICS2 Cybersecurity Workforce Study shows that Japan has nearly half a million cybersecurity professionals, a notable 23.8% increase from the previous year, contrasting with a global average of 8.7%. Despite this growth, the demand far exceeds supply, with a shortage of 110,254 professionals, marking a 97.6% increase year-over-year — significantly higher than the global average of 12.6%. This gap is unprecedented compared to other nations evaluated in the ICS2 study.

    This macro perspective mirrors smaller businesses’ daily challenges, particularly with AI-driven cyber threats.

    Makoto Suzuki, Regional Sales Director for Japan at Barracuda, highlights the survey’s findings: Japanese SMBs recognize AI’s benefits for enhancing business productivity but remain cautious about the cyber threats it poses. Suzuki notes, “This could hold businesses back from harnessing the full potential of AI to revolutionize business performance and competitiveness by optimizing processes, reducing costs, improving quality, and providing new insights and ideas.”

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    Samsung’s leap: Securing 2nm AI chip deal, nipping at TSMC’s Heels https://techwireasia.com/02/2024/samsung-vs-tsmc-the-race-in-baging-2nm-chip-deals/ Wed, 21 Feb 2024 01:45:33 +0000 https://techwireasia.com/?p=237985 Insider reveals that Japan’s PFN, partnered with TSMC since 2016, had opted for 2nm AI chips by Samsung instead. The deal is a first for Samsung and a big win against TSMC in the advanced chip processing technology race. Samsung aims to lure customers with lower prices for its 2nm process, eyeing Qualcomm’s flagship chip... Read more »

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  • Insider reveals that Japan’s PFN, partnered with TSMC since 2016, had opted for 2nm AI chips by Samsung instead.
  • The deal is a first for Samsung and a big win against TSMC in the advanced chip processing technology race.
  • Samsung aims to lure customers with lower prices for its 2nm process, eyeing Qualcomm’s flagship chip orders.
  • In semiconductor manufacturing, there is a battle raging between Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics. As the demand for advanced chips skyrockets in the era of AI, 5G, and the Internet of Things (IoT), the competition between these industry giants has intensified, with each vying for dominance in the lucrative chip market.

    Not too long ago, in a compelling twist unveiled during Samsung Electronics’ fourth-quarter financial disclosure of 2023, whispers of a meaningful deal echoed through the tech sphere: the company’s foundry division had clinched a coveted contract for 2-nanometer (nm) AI chips. At that point, shrouded in mystery, Samsung kept the identity of this pivotal partner concealed. 

    Earlier this week, a revelation from Business Korea unveiled the patron: Japanese AI startup Preferred Networks Inc. (PFN). Since its inception in 2014, PFN has emerged as a powerhouse in AI deep learning, drawing substantial investments from industry giants like Toyota, NTT, and FANUC, a leading Japanese robotics firm.

    Samsung vs TSMC

    Samsung, headquartered in Suwon, South Korea, is set to unleash its cutting-edge 2nm chip processing technology to craft AI accelerators and other advanced AI chips for PFN, as confirmed by industry insiders on February 16, 2024. 

    Should news of this landmark deal be legitimate, it would prove mutually advantageous. It empowers PFN with access to state-of-the-art chip innovations for a competitive edge while propelling Samsung forward in its fierce foundry market rivalry with TSMC, as per insider reports.

    Ironically, PFN has had a longstanding partnership with TSMC dating back to 2016 but is opting to shift gears hereon, going for Samsung’s 2nm node for its upcoming AI chip lineup, according to a knowledgeable insider. PFN also chose Samsung over TSMC due to Samsung’s full-service chip manufacturing capabilities, covering everything from chip design to production and advanced packaging, sources revealed.

    Experts also speculate that although TSMC boasts a more extensive clientele for 2nm chips, PFN’s strategic move to Samsung hints at a potential shift in the Korean giant’s favor. This pivotal decision may pave the way for other significant clients to align with Samsung, altering the competitive landscape in the chipmaking realm.

    No doubt, in the cutthroat world of contract chipmaking, TSMC reigns supreme, clinching major deals with industry giants like Apple Inc. and Qualcomm Inc. But, as the demand for top-tier chips escalates, the race for technological superiority is heating up, with TSMC and Samsung at the forefront of the battle. While TSMC currently leads the pack, boasting 2nm chips for clients like Apple and Nvidia, Samsung is hot on its heels. 

    “Apple is set to become TSMC’s inaugural customer for the 2nm process, positioning TSMC at the forefront of competition in the advanced process technology,” TrendForce stated in its report. Meanwhile, according to Samsung’s previous roadmap, its 2nm SF2 process is set to debut in 2025. 

    The steps Samsung's Foundry Business is taking in order to meet customers’ needs, including: △foundry process technology innovation, △process technology optimization for each specific applications, △stable production capabilities and customized services for customers. Graph: The Korean Economic Daily.

    Samsung’s Advanced Node Roadmap Down to 1.4nm in 2027. Graph: The Korean Economic Daily.

    “As stated in Samsung’s Foundry Forum (SFF) plan, Samsung will begin mass production of the 2nm process (SF2) in 2025 for mobile applications, expand to high-performance computing (HPC) applications in 2026, and further extend to the automotive sector and the expected 1.4nm process by 2027,” TrendForce noted.

    Compared to the second-generation 3GAP process at 3nm, it offers a 25% improvement in power efficiency at the same frequency and complexity and a 12% performance boost at the same power consumption and complexity while reducing chip area by 5%. In short, with TSMC eyeing mass production of 2nm chips by 2025, the competition between these tech titans is set to reach new heights.

    Yet, in a strategic maneuver reported by the Financial Times, Samsung is gearing up to entice customers with discounted rates for its 2nm process, a move poised to shake up the semiconductor landscape. With its sights set on Qualcomm’s flagship chip production, Samsung aims to lure clients away from TSMC by offering competitive pricing. 

    This bold initiative signals Samsung’s determination to carve out a larger market share and challenge TSMC’s dominance in the semiconductor industry.

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    We asked Dell why enterprises can’t afford to hold back on adopting generative AI https://techwireasia.com/11/2023/dell-ai-why-cant-enterprises-afford-to-hold-back-on-adopting-generative-ai/ Wed, 01 Nov 2023 00:00:41 +0000 https://techwireasia.com/?p=234557 Peter Marrs, Dell Technologies’ president for Asia Pacific & Japan, explained why APAC enterprises cannot put off harnessing generative AI any longer. Marrs also iterated generative AI’s potential for enterprises and the benefits of gaining an early advantage. He talked through the crucial tech infrastructure in handling large sets of data securely. Like the groundbreaking... Read more »

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  • Peter Marrs, Dell Technologies’ president for Asia Pacific & Japan, explained why APAC enterprises cannot put off harnessing generative AI any longer.
  • Marrs also iterated generative AI’s potential for enterprises and the benefits of gaining an early advantage.
  • He talked through the crucial tech infrastructure in handling large sets of data securely.
  • Like the groundbreaking advances in personal computing four decades ago and server virtualization over two decades ago, Dell Technologies believes the current wave of generative AI is another transformative era with boundless potential. “We’re still in the early stages of the generative AI revolution, but it’s real. Generative AI is an inflection point. It’s disruptive. It’s game-changing. More to learn. More to come,” vice chairman and COO Jeff Clarke wrote in a blog post recently.

    The excitement surrounding generative AI is understandable, especially in Asia, where we see a growing appetite for the technology among enterprises since the launch of OpenAI’s ChatGPT in late 2022. In fact, a report by International Data Corporation (IDC) shows that two-thirds of surveyed organizations in Asia Pacific & Japan are looking into investing in generative AI and technologies affiliated with it. 

    Like the data shared by IDC, most statistics on generative AI worldwide have been equally astounding. Pundits say other technology has never garnered the interest of corporate executives and the general public so rapidly and thoroughly. But that also means discussion around generative AI is often polarized, with enthusiasts and skeptics dominating the discourse, leaving little room for the middle ground. 

    This poses a significant challenge for business leaders who must make AI-related decisions grounded in factual information and strategic significance, rather than being swayed by overconfidence and exaggerated claims. Peter Marrs, president of Dell Technologies’ Asia Pacific & Japan (APJ) region, spoke with Tech Wire Asia to share the compelling need for enterprises to embrace generative AI correctly.

    This interview has been edited for length and clarity.

    TWA: How should enterprises approach generative AI now?

    What technology enables is incredible, and the stakes for IT and its impact on society has never been higher, placing a spotlight on what is needed to unlock actual value and do so ethically. Enterprises should prioritize a deep understanding of how generative AI works and the specific use cases to which it can be applied in their businesses. Beyond understanding the infrastructure required for it, companies should also look into issues of legal and ethical consideration as well as security and privacy to ensure their AI implementation serves them long-term. 

    Peter Marrs, president, Asia Pacific & Japan, Dell Technologies.

    Peter Marrs, president, Asia Pacific & Japan, Dell Technologies.

    TWA: Why does Dell believe APAC enterprises cannot put off harnessing generative AI for long? 

    Enterprises must stay at the forefront of innovations, including generative AI, to meet consumers’ needs and expectations. In APAC, consumers have shown demand for personalized, seamless, and omnichannel experiences, with 94% of APAC consumers saying they are willing to spend more with companies that personalize the customer service experience

    One use of generative AI helps enterprises evolve to meet these needs by powering product recommendations and improved AI-driven chatbot customer service.

    Generative AI can also play a critical role in protecting enterprises against emerging threats of cyberattacks and data breaches across our region. According to a Check Point Software Technologies report, the APAC witnessed the highest year-over-year increase in weekly cyberattacks during the first quarter of 2023, averaging 1,835 attacks per organization. 

    The need for cybersecurity and fraud management is a challenge where generative AI can be essential in predicting threats, enhancing threat intelligence, and enabling faster enterprise-wide detection and response to vulnerabilities. And last but certainly not least, AI has immense opportunities that will fundamentally shift work and make it more effective for humans. 

    As generative AI evolves, machines pick up more day-to-day tasks, freeing employees to focus on higher-value activities. Organizations should explore using AI to increase efficiency and focus their team members on high-priority work that better meets customers’ demands. 

    TWA: How can enterprises harness the first mover’s advantage in the race for GenAI? Does Dell AI help deliver that advantage?

    To harness its full potential, leaders must understand the technology’s capabilities and potential applications specific to their business. AI projects, at their core, are about a decision to operate parts of your business differently, so all corporate functions need to be involved in AI projects. 

    They’ll also need to build internal expertise to prepare for the adoption of generative AI, finding the right talent that understands the model complexities and data requirements with a broad range of skills that blend scientific acumen with creative capability. Beyond hardware, enterprises should delve deep into regulatory compliance, ownership of content through IP and patents and consider ethical issues surrounding generative AI, including sustainability, to ensure that no harm is caused in the push for innovation.

    To better understand what’s limiting or stopping organizations from embracing these technologies, Dell Technologies has surveyed 500 IT Leaders from several countries to generate important insights around readiness and potential. Source: Dell

    To better understand what’s limiting or stopping organizations from embracing these technologies, Dell Technologies has surveyed 500 IT Leaders from several countries to generate important insights around readiness and potential. Source: Dell. 

    Note – you should not always associate AI with complexity. Some reasonably easy first-mover paths are less risky but provide a valuable tool set. Lower-risk projects are worth doing because they provide incremental value and give businesses foundational expertise to build upon.

    Working with trusted IT partners to align resources is the quickest way enterprises can kick start the process and enable the right strategic generative AI approach for their business. Engaging technology providers like Dell that offer AI expertise, hardware, and software in creating custom full-stack solutions can accelerate the deployment of generative AI in enterprises, unlocking the power of AI with support across the complete lifecycle, from strategy, implementation adoption to scaling of their strategy.  

    TWA: What foundations do enterprises need to start harnessing generative AI effectively?

    To harness generative AI effectively and accelerate time to results, enterprises must strategically navigate technology options and integration challenges. This process hinges on establishing solid foundations, including:

    1.  A robust data strategy: GenAI models thrive on data, and enterprises need a robust data strategy that involves collecting, cleaning, and curating high-quality data.
    2. Data privacy: GenAI can only be successfully deployed if data privacy and security are prioritized. Dell AI solutions simplify enterprise-level GenAI deployment with a tested combination of optimized hardware and software. This delivers the power to convert enterprise data into smarter, higher-value outcomes while maintaining data privacy.
    3. Invest in the necessary infrastructure: training and deploying GenAI models can be computationally intensive. Enterprises need to invest in infrastructure that can facilitate efficient training and inference processes, provide scalability for handling varying workloads, and address data protection and regulation challenges.
    4. Iterative development: GenAI models often require multiple iterations and updates to improve performance. Enterprises need to implement a continuous development cycle, incorporating feedback from real-world usage, to refine and enhance the models over time. 

    TWA: For enterprises rushing to integrate generative AI tools with their internal and external workflows – what are some pitfalls to avoid when adopting this technology?

    Data hygiene is critical since your ability to harness AI is only as good as the data feeding it. Generative AI workloads can be broadly categorized into training and inferencing. Training uses a large dataset of examples to train a model, while inferencing uses a trained model to generate new content based on input. 

    Generative AI models may require large amounts of training data to generate accurate results. To address this challenge, enterprises must ensure that their data is clean, precise, well-labeled, and representative of the problem they are trying to solve. When adopting the technology, organizations should also think carefully about computing power and how to support it through an IT infrastructure, whether in the internal data center, on the cloud, or via the edge. Executives who want to make the most of generative AI must create an ecosystem of trusted technology partners who help them bring in specialist capability as it’s demanded.

    TWA: Are GenAI platforms a data governance risk for businesses?

    Using generative AI in a business setting can pose various risks around accuracy, privacy, security, regulatory compliance, and intellectual property infringement. Generative AI models are refined based on input data provided by the company, and if they do not use data that is authorized, or address privacy concerns adequately, it may result in a data breach or non-compliance with data security regulations.

    However, with the proper security measures, enterprises can mitigate such risks. Some measures include ensuring encryption, managing access rights, implementing monitoring mechanisms, and establishing acceptable data-handling practices.

    TWA: What are some of the technology architectures that can not only process larger datasets that come with GenAI but also do so securely?

    GenAI models can be sizable, with many parameters and intermediate outputs. This volume means that the models require significant amounts of storage to hold all the data. It is expected that they’ll use distributed storage systems such as Hadoop or Spark to store the training data and intermediate outputs during training. 

    For inferencing, storing the model on a local disk might be possible, but for larger models, it might be necessary to use network-attached storage or cloud-based storage solutions. AI systems need scalability, high-capacity, and low-latency storage components for file objects and file storage.

    TWA: Large language models are notably cost-ineffective to operate on a small scale. How realistic are models for businesses that run inside a “walled garden”?

    There are two distinct variants of generative AI. The first is massive, multifunctional generalized models, with GPT-4 and ChatGPT as examples. The second is domain-specific ones, such as PubMed GPT or Dramatron, or enterprise-specific models, such as stable diffusion, Bloomberg GPT, and Code Gen. 

    The core neural network-based language model is essentially the same. However, the difference lies in the number of parameters and expert systems focused on unique functionality like common sense reasoning, translations, pattern recognition, reading comprehension, and code completion.

    While massive multifunctional generalized models have many more parameters and expert systems are trained on a broad and large volume of data and may be more practical, the same is not true for domain and enterprise-specific generative AI. 

    Domain and enterprise-specific generative AI use smaller proprietary data sets with fewer parameters and expert systems. These models will make more sense for businesses that operate inside a “walled garden” as they do not require a massive scale or cost, and in most cases, they can be trained up with a small cluster of servers with GPUs and perform inference on edge with a single server.

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    Four decades and billions of dollars in sales later, what’s next for Apple in Japan? https://techwireasia.com/08/2023/apple-remains-strong-in-japan/ Wed, 09 Aug 2023 13:17:28 +0000 https://techwireasia.com/?p=231628 Apple’s App Store ecosystem helped developers generate billings and sales of US$46 billion in Japan for 2022. According to Apple, revenue accrued by small developers increased by 32% between 2020 and 2022. Apple held a roughly 49% share of the Japanese smartphone market in unit terms in 2022. Many are not aware that for years,... Read more »

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  • Apple’s App Store ecosystem helped developers generate billings and sales of US$46 billion in Japan for 2022.
  • According to Apple, revenue accrued by small developers increased by 32% between 2020 and 2022.
  • Apple held a roughly 49% share of the Japanese smartphone market in unit terms in 2022.
  • Many are not aware that for years, Apple has dominated the smartphone market in Japan. So much so, the iPhone holds a significant market share in the Japanese market compared to other Western countries. Considering that Japan has been a notoriously difficult market for foreign companies to crack, Apple’s feat in the land of the rising sun is impressive.

    It all started when the tech giant established its first Japanese unit in June 1983, seven years after its 1976 founding as a personal computer maker. Distribution in Japan had been entrusted to partners such as Toray before then and to a Canon unit for a time afterward.

    Japanese youths smile as they look at the new iBook from US computer maker Apple Computer Inc,. at a department store in Tokyo 16 October 1999. The firm started selling iBook and iMac DV in Japan today at a price of 198,000 yen (1,860 dollars). AFP PHOTO/Toru YAMANAKA (Photo by TORU YAMANAKA / AFP)

    Japanese youths smile as they look at the new iBook from US computer maker Apple Computer Inc,. at a department store in Tokyo 16 October 1999. The firm started selling iBook and iMac DV in Japan today at a price of 198,000 yen (1,860 dollars). AFP PHOTO/Toru YAMANAKA (Photo by TORU YAMANAKA / AFP)

    Then, in 2008, Apple released the first iPhones in Japan. The phones boasted 3G connectivity, a rare but desirable feature at the time.

    At that point, the market was saturated with models that lacked 3G connectivity and did not support the installation of third-party apps. However, the Japanese craved more features and functions than other markets. Recognizing this, Apple gradually added features and functionalities in subsequent models and iOS software updates.

    When Apple’s initial carrier partner, Softbank, took over, its popularity skyrocketed even further. The company relied on low prices and aggressive marketing. Masayoshi Son, the CEO, collaborated with his long-time friend Steve Jobs to tailor iPhones to Japanese users’ desires and preferences. Eventually, the iPhone became a must-have item in Japan.

    In short, the iPhone was one of the first smartphones widely adopted in Japan. The ‘iPhone for Everyone’ campaign by Softbank, among others, fueled its popularity. Apple’s position was further bolstered by carriers that historically offered more generous subsidies for the iPhone, making it more affordable for consumers.

    But it wasn’t all smooth sailing for the American tech giant in Japan. As Japan transitioned to the smartphone market, competition increased, especially from Samsung. Yet, Apple maintained its dominance. Samsung ranked fourth in Japan behind Apple, Sony, and Sharp Corp for most years, partly due to a Japanese consumer bias against many Korean brands.

    Unfortunately, anti-Korean sentiment in Japan was a significant factor in Samsung’s challenges in the country.

    Apple in Japan 40 years later

    Today, Apple still stands strong in Japan regardless of the increased competition. While Apple opened its first non-US store in Tokyo in 2003, today the tech giant has ten across the country, including in Fukuoka and Kyoto. When Tim Cook visited Japan last year, he shared that the iPhone maker had invested more than US$100 billion in its Japanese supply network over the last five years alone.

    Tim Cook in Japan, December 2022. (Source: Twitter)

    Tim Cook in Japan, December 2022. (Source: Twitter)

    Meanwhile, Cook also shared that Apple had boosted its spending on suppliers in Japan by more than 30% since 2019. Japan has also become a critical manufacturing and sales hub for Apple. The country’s market for electronic components grew with the iPhone’s release, and Apple’s supply chain now encompasses nearly 1,000 companies.

    This week, Japan celebrates 40 years of Apple in the country. Apple’s CEO took the opportunity to announce that the company’s App Store ecosystem in Japan helped developers generate billings and sales of US$46 billion in 2022 alone. Cook further noted that revenue accrued by small developers increased by 32% between 2020 and 2022.

    In Japan, Apple supports more than one million jobs through its supply chain and the app economy. As for market share, Apple held a roughly 49% share of the Japanese smartphone market in unit terms in 2022, according to Tokyo’s MM Research Institute. Apple was the top mobile phone vendor in the country for the 11th straight year, starting in 2012. It also controls around half of the tablet market and around 60% of smartwatches.

    But headwinds have increased recently. Apple’s Japan sales fell 11% year-over-year last quarter and accounted for just 6% of the companywide total. Reports suggest that the downturn partly stemmed from a weak yen and new restrictions on discounted smartphone sales.

    It’s safe to say that Japan remains an Apple stronghold, and it’s reasonable to assume it’ll stay that way for the foreseeable future.

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    How Japan is revolutionizing the AI and deep-tech startups landscape https://techwireasia.com/08/2023/ai-startups-fuelling-japans-deep-tech-revolution/ Tue, 08 Aug 2023 00:10:44 +0000 https://techwireasia.com/?p=231536 Miyako Capital’s new 20 billion yen fund boosts Japan’s deep-tech in biology and AI. Amid APAC’s expanding biotech market, Miyako Capital infuses 20 billion yen into deep-tech. Miyako Capital, a venture capital firm associated with Kyoto University, is setting up a fund projected to amass around 20 billion yen (US$141 million). The fund’s objective is... Read more »

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  • Miyako Capital’s new 20 billion yen fund boosts Japan’s deep-tech in biology and AI.
  • Amid APAC’s expanding biotech market, Miyako Capital infuses 20 billion yen into deep-tech.
  • Miyako Capital, a venture capital firm associated with Kyoto University, is setting up a fund projected to amass around 20 billion yen (US$141 million). The fund’s objective is to support startups engaged in deep-tech biology and artificial intelligence (AI).

    Deloitte’s report indicates that the APAC biotech market is on a growth trajectory, with a compound annual growth rate (CAGR) of 10.9% predicted between 2020 and 2025. The anticipated market value stands at US$318.8 billion by 2025, driven by factors such as escalating demand for novel therapies and drugs, advancements in precision medicine, and technological progression.

    The availability of funds is a critical catalyst for biotech investments in the APAC region. Both governments and private investors have shown considerable interest in biotech investments, acknowledging this industry’s growth and innovation potential. For instance, in 2020, Singapore’s government pledged a US$500 million fund for its biotech industry, paralleling China’s substantial investment plans in the same field.

    The growth of precision medicine is yet another factor propelling biotech investments in the APAC region. Progress in genomics, proteomics and other areas has empowered researchers to design more customized therapies, improving patient outcomes. This has increased interest in precision medicine, with companies like Astellas from Japan and South Korea’s Celltrion spearheading this field.

    Moreover, technological advancements, particularly in artificial intelligence, machine learning, and big data analytics, are steering biotech investments in the APAC region. The ability to sift through copious amounts of data for new drug targets and more efficacious therapies has given rise to a new generation of biotech startups. These startups are concentrating on creating state-of-the-art technologies to boost innovation in the industry.

    Concerning Kyoto University’s contribution, it’s projected to be among Japan’s largest funds, injecting between 500 million yen and 1 billion yen into each startup.

    A boost for AI and biology startups

    The fund is slated to split its resources, dedicating half to biology and other life science startups, and the remaining half to AI and electronics. Miyako Capital plans to expand its team with members experienced in evaluating these advanced tech sectors.

    The firm will also forge allegiances with other educational institutions to scout for potential investments nationwide.

    The 20 billion yen fund is expected to be sourced partly (about 50%) from two state-backed funds, the Japan Investment Corp. and the Organization for Small and Medium Enterprises and Regional Innovation, Japan. Other investors like Japan Post Bank and Shiga Bank will contribute to the remaining funds.

    Deep tech startups are typically characterized by pursuing fundamental innovation, necessitating growth time and long-term investor commitment.

    Biotech startups are to be supported with innovative technologies like AI, machine learning, and big data analytics.

    Biotech startups are to be supported with innovative technologies like AI, machine learning, and big data analytics. (Source – Shutterstock)

    Miyako Capital plans to leverage its Silicon Valley office to aid startups in their global expansion efforts.

    Similarly, University of Tokyo Edge Capital Partners, another VC firm tied to the University of Tokyo, initiated a fund exceeding 30 billion yen in 2021 for deep tech investments.

    Since its inception in 2013, Miyako Capital has backed over 50 companies, primarily those leveraging research from Kyoto University. Notable successes include recouping investments from five such companies, one of them being regenerative medicine startup StemRIM.

    About 30% of the firm’s managed funds are invested in research startups not affiliated with Kyoto University.

    Japanese Prime Minister Fumio Kishida intends to promote the country’s deep tech startups under a five-year plan announced last November. The plan emphasizes the creation of a framework enabling these startups to collaborate with large corporations, focusing on production and distribution.

    The promising future of Japan’s deep-tech scene

    The future of deep tech in Japan appears bright and expansive, propelled by the concerted efforts of various stakeholders such as venture capital firms, academic institutions, the government, and the startups themselves. Key considerations include:

    • Strong financial backing: Both venture capital firms like Miyako Capital and government bodies are substantially supporting deep tech startups. This support encompasses financial assistance, mentorship, networking opportunities, and support for international expansion. With initiatives like the five-year plan announced by Prime Minister Fumio Kishida and significant contributions from state-backed funds, the government is fostering a favorable environment for these startups.
    • University collaborations and role of VC firms: Universities often serve as innovation incubators, and Japan is no exception. Partnerships between venture capital firms and universities, especially firms like Miyako Capital, with a track record of backing research-led startups, are poised to sustain the growth of deep tech startups. This will ensure a continuous flow of innovative ideas and entrepreneurial talent.
    • Focus on key future-oriented sectors: Japan is determined to progress in crucial future-oriented sectors such as biology, AI, and electronics. Progress in AI and machine learning equips researchers with the tools to process extensive data for identifying new drug targets and developing more effective therapies. This focus is anticipated to drive Japan’s next technological revolution.

    Given the robust financial backing, government support, academic partnerships, and emphasis on key future-oriented sectors, the future of deep-tech startups in Japan appears promising. The stage is set for a flourishing deep-tech startup ecosystem, complemented by a framework for partnerships with large corporations.

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    Japan to catch up on gen AI with a new supercomputer https://techwireasia.com/07/2023/japan-gen-ai-boost-through-supercomputers/ Wed, 26 Jul 2023 03:45:57 +0000 https://techwireasia.com/?p=231096 Plans for the supercomputer were announced by the Ministry of Economy, Trade and Industry. The National Institute of Advanced Industrial Science and Technology will develop a supercomputer. The machine will have a computing capability roughly 2.5 times greater than its existing machine by 2024. AIST will make it available to domestic companies developing generative AI... Read more »

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  • Plans for the supercomputer were announced by the Ministry of Economy, Trade and Industry.
  • The National Institute of Advanced Industrial Science and Technology will develop a supercomputer.
  • The machine will have a computing capability roughly 2.5 times greater than its existing machine by 2024.
  • AIST will make it available to domestic companies developing generative AI through a cloud service.
  • As a country known for its advanced technology, Japan needs to catch up in the generative artificial intelligence (AI) race. While countries like the US, China, and European Union (EU) are leading with their algorithms, Japan’s lag is attributed mainly to its shortcomings in deep learning and extensive software development.

    For starters, the key to generative AI development is large language models, which underpin ChatGPT and Baidu’s Ernie Bot, capable of processing vast data sets to generate text and other content. But as Noriyuki Kojima, co-founder of Japanese LLM startup Kotoba Technology puts it, Japan is trailing behind the US, China, and the EU in developing those algorithms.

    “Japan’s trailing position in the field of generative AI largely stems from its comparative shortcomings in deep learning and more extensive software development,” Kojima said in an interview with CNBC. To put into context, based on a report by Reuters in May, citing research from a consortium of state-run institutes, Chinese organizations, including tech giants Alibaba and Tencent, have launched at least 79 LLMs domestically over the past three years.

    In the US, corporate powerhouses such as OpenAI, Microsoft, Google, and Meta play a significant role in propelling the country’s LLM advancements. But deep learning requires a “robust community of software engineers” to develop necessary infrastructure and applications, Kojima added. 

    Japan, however, will face a deficit of 789,000 software engineers by 2030, according to the country’s Ministry of Economy, Trade and Industry (METI). Japan is also facing hardware challenges since LLMs need to be trained using AI supercomputers like IBM’s Vela and Microsoft’s Azure-hosted system. Unfortunately, Nikkei Asia reported that no private Japanese company possesses its own “world-class machine” with those capabilities.

    How can Japan catch up on gen AI?

    Kojima told CNBC how government-controlled supercomputers like Fugaku “hold the key” to Japan’s pursuit of LLMs. “Access to such large-scale supercomputers forms the backbone of LLM development, as it has traditionally been the most significant bottleneck in the process,” he explained.

    This picture taken on June 16, 2020 shows Japan's Fugaku supercomputer at the Riken Center for Computational Science in Kobe, Hyogo prefecture. The Fugaku supercomputer, built with government backing and used in the fight against the COVID-19 coronavirus, is now ranked as the world's fastest, its developers announced on June 22, 2020. (Photo by JIJI PRESS / AFP) / Japan OUT

    Japan’s Fugaku supercomputer at the Riken Center for Computational Science in Kobe, Hyogo prefecture. The Fugaku supercomputer, built with government backing and used in the fight against the COVID-19 coronavirus, was ranked as the world’s fastest, based on its developers announcement on June 22, 2020. (Photo by JIJI PRESS / AFP) / Japan OUT

    The upside is that the METI has plans to introduce a new cutting-edge supercomputer through its affiliated laboratory to support the development of generative AI in Japan, according to Nikkei’s latest report. According to Nikkei, the plan is for the National Institute of Advanced Industrial Science and Technology (AIST) to develop a supercomputer with a computing capability roughly 2.5 times greater than its existing machine as early as 2024. 

    Under METI’s supervision, the research arm will make it available to domestic companies developing generative AI through a cloud service. AIST, one of Japan’s most prominent research institutes, plans to establish a new research center for supercomputers and quantum technologies in July. METI will provide 32 billion yen (US$226 million) to finance the installation of facilities.

    Nikkei also stated that AIST will operate the new supercomputer at the center for its studies on quantum technology and open it to Japanese companies. So far, AIST’s existing supercomputer is accessible from outside via a cloud service.

    Separately, the Tokyo Institute of Technology and Tohoku University also have plans to work on the country’s LLMSs prowess. Based on an announcement in May, the institute and university plan to use the Fugaku supercomputer to develop LLMs based primarily on Japanese data in collaboration with the supercomputer’s developers, Fujitsu and Riken. 

    The organizations also plan to publish their research results in the same year AIST intends to release its supercomputer, which is 2024. According to Fujitsu, the research results would help other Japanese researchers and engineers develop LLMs.

    Above all the efforts mentioned above, the Japanese government also plans on investing 6.8 billion yen (US$48.2 million), about half the total cost, to build a new supercomputer in Hokkaido that will begin service as early as 2024, Nikkei reported. That particular supercomputer, built in Hokkaido, will specialize in LLM training to promote Japan’s development of generative AI.

    Based on reports, the cloud service provider Sakura Internet is assembling the supercomputer in Ishikari City. It’ll contain more than 2,000 graphics processing units from Nvidia, which are necessary for LLMs. Interestingly, the Sakura Internet’s supercomputer would be able to develop GPT-3 within roughly three days and about a year to develop GPT-4.

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    In Japan, Google is now the second biggest smartphone brand https://techwireasia.com/07/2023/google-smartphone-dominates-japanese-smartphone-market/ Mon, 10 Jul 2023 02:40:54 +0000 https://techwireasia.com/?p=230538 For the first time, Google became the second-largest smartphone brand in Japan. Google’s smartphone shipments in Japan were also the highest in the world.  Shipments in Japan exceeded the US for the first time. The smartphone brand by Google, Pixel, has been around since 2016, but it wasn’t until 2022 that the lineup “gained share in... Read more »

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  • For the first time, Google became the second-largest smartphone brand in Japan.
  • Google’s smartphone shipments in Japan were also the highest in the world.
  •  Shipments in Japan exceeded the US for the first time.
  • The smartphone brand by Google, Pixel, has been around since 2016, but it wasn’t until 2022 that the lineup “gained share in every market” the tech giant operated in. Even Alphabet CEO Sundar Pichai admitted that “2022’s Pixel 6a, 7, and 7 Pro are the best-selling generation of phones” the company has ever launched.

    In fact, Counterpoint Research indicated in its latest report that solid sales of the mid-range Pixel 6a and flagship Pixel 7 and Pixel 7 Pro, which were launched in the second half of 2022, have pushed Google’s global shipments in the first three months of this year (1Q23) to 67% higher than the same period last year.

    What is more interesting is that Pixels is turning out to be a big hit in one market in Asia, mainly Japan. Counterpoint Research reports that Pixel phones are seeing massive growth in the Japanese market, recording impressive sales in January-March.

    So much so that the Google smartphone brand is now the number two smartphone maker in the country after Apple, accounting for 9% of the market in the quarter. This represents 67% growth compared to a year ago, beating the overall smartphone market’s downturn. 

    “In Japan, Google’s smartphone shipments increased nearly fivefold in 1Q23 to reach an all-time-high share of 34% in the brand’s overall global shipments and secure the top position,” the report reads.

    Japan Smartphone Shipments Market Share by OEM, Q1 2023. Source: Counterpoint Market Monitor, 2023

    Japan Smartphone Shipments Market Share by OEM, Q1 2023. Source: Counterpoint Market Monitor, 2023

    On the other hand, while maintaining similar shipment levels of Google smartphones compared to the previous year, the US market slipped to second place due to the growth in Japan’s contribution. The US market’s share dropped by 20%, from 51% to 31%, Counterpoint noted.

    The main driver of Google smartphone growth in Japan

    For context, the recent launch of the Pixel 7a has seen a 74% increase in cumulative sales during its first three weeks compared to its predecessor. According to Counterpoint’s finding, this indicates a growing positive response to Pixel smartphones in the Japanese market. 

    Top down view of unboxing a brand new Google Pixel 7 ProSource: Shutterstock

    Top down view of unboxing a brand new Google Pixel 7 Pro. Source: Shutterstock

    “The main drivers of the Pixel 7a’s success are its upgraded Tensor G2 processor, camera performance, and RAM. The Pixel 7a’s specifications are comparable to the flagship Pixel 7 series, but the device comes at a roughly 24% lower price,” the report added.

    To top it off, the Japanese market’s preference for smaller screen sizes has significantly influenced the strong sales of the Pixel 7a. Moreover, unlike its predecessor, the Pixel 7a is available for purchase through all three major carriers in Japan – SoftBank, AU, and DOCOMO. In contrast, the Pixel 6a was only available through SoftBank and AU. 

    In Japan’s smartphone market, carrier partnerships substantially impact sales. That is why the Pixel 6a achieved impressive results, remaining the top-selling Android smartphone for seven consecutive months from September 2022 to March 2023. “With the Pixel 7a’s improved specifications and the addition of major carrier DOCOMO, the model is expected to deliver even better performance than its predecessor,” Counterpoint reckons.

    Local brands’ withdrawal is a plus for Google in Japan

    The growth within the first three months of this year has pushed Google to achieve its highest-ever market share in Japan at 9%, surpassing local brands such as Sharp and Sony to secure the second position after Apple, which has historically dominated the market with over 50% share. 

    On the other hand, local brands have exerted significant influence in the Android camp. Therefore, Google’s performance in the Japanese market holds substantial implications. Moreover, the withdrawal of local brands such as Kyocera, FCNT, and Balmuda from the smartphone market indicates that Tier-1 Japanese OEMs will be limited to only Sony

    “This is expected to strengthen the market dominance of US brands like Apple and Google in Japan. However, considering the maturity of the Japanese smartphone market, Google’s shipment growth is expected to be modest. As a result, Google’s strategy for expanding its global market share through the Japanese market may have some limitations,” Counterpoint concluded.

     

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    Critical infrastructure cyberattack on Japan’s biggest port   https://techwireasia.com/07/2023/critical-infrastructure-cyberattack-on-japans-biggest-port/ Fri, 07 Jul 2023 00:30:17 +0000 https://techwireasia.com/?p=230488 Cyberattacks on critical infrastructure are increasing especially with the growing tech adoption in these facilities. Some of the most commonly targeted critical infrastructure include gas pipelines, energy grids, transportation systems, oil refineries and healthcare facilities. The Cybersecurity and Infrastructure Security Agency categorizes critical infrastructure into sixteen sectors. They include: Chemical sector Commercial Facilities sector Communications... Read more »

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    Cyberattacks on critical infrastructure are increasing especially with the growing tech adoption in these facilities. Some of the most commonly targeted critical infrastructure include gas pipelines, energy grids, transportation systems, oil refineries and healthcare facilities.

    The Cybersecurity and Infrastructure Security Agency categorizes critical infrastructure into sixteen sectors. They include:

    • Chemical sector
    • Commercial Facilities sector
    • Communications sector
    • Critical Manufacturing sector
    • Dams sector
    • Defense Industrial Base sector
    • Emergency Services sector
    • Energy sector
    • Financial Services sector
    • Food and Agriculture sector
    • Government Facilities sector
    • Healthcare and Public Health sector
    • Information Technology sector
    • Nuclear Reactors, Materials and Waste sector
    • Transportation Systems sector
    • Waster and Wastewater systems

    Most countries around the world also have named similar sectors as critical infrastructure. Any damage to this infrastructure, be it via natural disasters, terrorism or cyberattacks could lead to serious consequences for a country, especially on its economy and the wellbeing of the citizens.

    Cybercriminals are aware of this and have continued to launch cyberattacks on these sectors. Some of the biggest critical infrastructure attacks include the ransomware cyberattack on Colonial Pipeline and JBS meat company. Both attacks disrupted the supply chain of products in affected countries.

    A more concerning cyberattack was on a water treatment plant in Florida in 2021. A cybercriminal had hacked the controls of the facility and adjusted the levels of sodium hydroxide in the water, which could end up poisoning thousands of users. An employee noticed the intrusion and was able to stop the attack.

    The UK government’s intelligence and security arm also issued an alert on Russian state-aligned threat actors aiming to conduct disruptive and destructive attacks against critical infrastructure in Western countries several weeks ago. More recently, critical infrastructure cyberattacks are also occurring in Asia. Several weeks ago, a tank storage facility in Malaysia fell victim to a ransomware attack.

    Hackers are targeting critical infrastructure.

    Critical infrastructures are vulnerable to cyberattacks. (Image source – Shutterstock)

    Cybercriminals target Japan’s largest port

    In Japan, the country’s largest port suffered a ransomware attack that disrupted port services. According to a report by Nikkei Asia, the port of Nagoya, which is also responsible for handling some of Toyota Motor’s car exports, suffered a crippling system glitch, which the port operator suspects to be a cyberattack.

    The port operator also received a ransom demand in exchange for the recovery of the port’s loading system. The system was used to load and unload containers from trailers. An employee noticed the system failure when he could not start a computer.

    Fortunately, the disruption lasted less than 48 hours as the port planned to resume operations. A Reuters report stated that the computer system had fully been recovered, but that was later than expected and the resumption of terminal operations has been pushed back by half a day.

    Media reports also indicated that LockBit 3.0, a Russian hacking group based in Russia was responsible for the cyberattack on the critical infrastructure. Japanese authorities are still investigating the cyberattack and ransom demand.

    Russian hacker groups continue to target critical infrastructures around the world. Britain’s National Cyber Security Center (NCSC) has warned of emerging threats to Western critical infrastructure by hackers that are sympathetic to Russia and its war on Ukraine. The agency mentioned that Russia-aligned “hacktivists” have carried out largely harmless online campaigns that have defaced prominent public websites or knocked them offline. However, some of those groups have been actively plotting ways to do more real-world damage.

    Apart from Russian hacker groups, Chinese hacker groups have also been planning cyberattacks in the US. According to a report by Reuters, the US State Department has warned that China was capable of launching cyberattacks against critical infrastructure, including oil and gas pipelines and rail systems, after researchers discovered a Chinese hacking group had been spying on such networks.

    In a multi-nation alert issued, the agency revealed the Chinese cyber-espionage campaign had been aimed at military and government targets in the United States. The Chinese government has rejected assertions that its spies are going after Western targets, calling the warning issued by the United States and its allies a “collective disinformation campaign.”

    Attacks on critical infrastructure is on the rise.

    A Tweet on increasing cyberattacks on critical infrastructure.

    Securing critical infrastructure

    Securing critical infrastructure is of paramount importance for organizations to protect essential systems and services from cyber threats and physical attacks. Organizations need to conduct a comprehensive risk assessment to identify vulnerabilities, threats, and potential consequences. They also need to understand the potential impact of an attack on critical systems and prioritize security measures accordingly.

    For cybersecurity, apart from implementing strong access controls, organizations need to consider network segmentation. This divides the critical infrastructure into separate segments to contain potential breaches and prevent the lateral movement of attackers. Other considerations include having firewalls and deploying intrusion detection/prevention systems (IDS/IPS). These technologies help monitor and filter network traffic, detect anomalies, and prevent unauthorized access.

    More importantly, all software and firmware need to be kept up to date to address known vulnerabilities and exploits. Organizations should also utilize strong encryption methods to protect sensitive data at rest and in transit. Implement robust security monitoring systems that actively detect and respond to security incidents in real time. Lastly, organizations should conduct regular cybersecurity awareness training for employees to educate them about best practices, social engineering threats, and how to handle suspicious emails or attachments.

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    Japan revamps semiconductor strategy as competition and geopolitical tensions heightens https://techwireasia.com/06/2023/japan-revamps-semiconductor-strategy-as-competition-and-geopolitical-tensions-heightens/ Wed, 07 Jun 2023 05:04:48 +0000 https://techwireasia.com/?p=229510 Japan has tripled its semiconductor sales goal. The country may struggle to meet its target due to restrictions on relevant exports.  Since the early 2000s, the Japanese government and domestic semiconductor companies have been reflecting on why the country’s chip industry has been losing ground to foreign competitors. Countless efforts were put in place to... Read more »

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  • Japan has tripled its semiconductor sales goal.
  • The country may struggle to meet its target due to restrictions on relevant exports. 
  • Since the early 2000s, the Japanese government and domestic semiconductor companies have been reflecting on why the country’s chip industry has been losing ground to foreign competitors. Countless efforts were put in place to revive global interest in Japan’s stalled chip sector over the last two decades.

    Following a lost decade in the 2010s, when Japan still failed to invest in its once-thriving industry, the government released a semiconductor strategy in 2020. It set a goal of 5 trillion yen in sales of domestically produced semiconductors by 2030. That was three years ago. This week, Japan released a revised strategy for its chip industry, including an ambitious sales goal.

    According to the strategy, the country aims to increase sales of semiconductors to more than 15 trillion yen (US$108 billion) by 2030, tripling the 2020 figure. The plan is part of Japan’s strategy to put chips at the center of its economic security policy. 

    Here’s the revised semiconductor strategy plan for Japan

    According to Japan’s Ministry of Economy, Trade and Industry (METI), the revised strategy, released on June 6, aims to strengthen efforts to develop and produce advanced semiconductors critical for economic security measures and advanced technology like generative AI.

    The strategy also stated that the sales target for firms that make chips in Japan would help secure a stable supply of semiconductors for the nation. “Various investments are being made by Japanese chip-related companies, including smaller ones, and we’d like to back up these investments,” economy minister Yasutoshi Nishimura told reporters before the strategy’s release. 

    “We want to secure the necessary budget to support these efforts.” The 274-page strategy, however, didn’t say how much the government plans to dole out over the coming years in addition to the billions of dollars already in place to encourage Taiwan Semiconductor Manufacturing Co. to add production capacity and to fund Japan’s chip venture, Rapidus Corp. 

    For context, Japan has pledged financial support worth 330 billion yen for Rapidus and up to 476 billion yen for TSMC’s new factory in Kumamoto in southern Japan. The government also provides up to 92.9 billion yen in subsidies to Kioxia Holdings Corp.’s plant in Mie in central Japan. 

    The revised strategy showed that the government expects the TSMC and Kioxia projects alone to boost Japan’s gross domestic product by 4.2 trillion yen, create about 463,000 jobs, and generate roughly 760 billion yen in tax revenue. 

    For the revised strategy, nevertheless, Japan will consider tax breaks and subsidies for companies investing in semiconductors, storage batteries, biomanufacturing, and data centers, to stay competitive with the rest of the world, according to a revised economic plan also issued.

    According to METI, Japan’s share of the world’s market shrank from 50% in 1990 to 10% today. The government’s goal is simple; to maintain that remaining 10% market share by 2030.

    What led to Japan’s decision?

    Although Japan’s chip industry dominated the global market in the 1980s, it has seen a downtrend since the US cracked down on the Japanese industry by forcing it to sign a deal detrimental to the sector. When Japan entered a period of economic dynamism in the 1970s, US policymakers began to see Japan as a growing market competitor. 

    Specifically, there was a concern among American policymakers that export-subsidized Japanese firms were “dumping” chips and consumer electronics into the US market in an attempt to crowd out US domestic firms while denying foreign access to the Japanese domestic market.

    Amid growing dissatisfaction in the US with perceived unfair trade practices from Japanese industry, Washington began pushing for trade concessions from the Japanese government. The Japanese, concerned over the risk of being shut out from the US market entirely, made concessions under the US—Japan Semiconductor Agreement in 1986.

    The agreement, unfortunately, gave the US government the authority to set minimum fair market prices for chips in the US while also increasing the foreign share of the Japanese semiconductor market from 10% to 20%. These two stipulations simultaneously eroded Japanese competitiveness in foreign and semiconductor markets. They enabled semiconductor companies in the US, South Korea, and other countries to gain most of the world’s semiconductor market share.

    According to analysts, after countless initiatives since the late 90s, Japan’s plan to revive its chip industry against such fierce competition faces more significant uncertainty and challenges. Global Times aptly summed up the challenges.

    “First and foremost, even if Japan, with its existing advantages and ongoing efforts, can produce such a volume of chips, it could face a serious challenge in finding buyers due to Japan’s restrictions on relevant export,” the report stated. On May 23, the Japanese government announced that it would include 23 items, including advanced equipment for semiconductor manufacturing, to a list of regulated exports

    The move is scheduled to take effect in late July and follows similar steps taken by the US government. Although the Japanese government said that the move was not targeting any specific country, the move is widely seen as a target to China. As it is, semiconductors are Japan’s second-largest export product after vehicles and also the largest export commodity to China. 

    In 2020 alone, Japan was the top exporter of semiconductor manufacturing equipment to China, according to media reports. Rising tension over time led Japan’s exports to China to plunge by 20% in the first quarter of 2023, bringing total bilateral trade down by 11.5%.  

    Beyond China, the semiconductor ambitions of Japan have also been facing fierce competition from many economies in the Asia Pacific region and around the world, including the US, South Korea, and Taiwan.

    Overall, the ambitious sales target has plenty of hurdles to endure, and only time will tell if Japan will succeed in reviving its semiconductor industry – or maintain its share by the end of this decade.

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    Japan allocates US$7 billion for chip gear spending in 2024, the most significant hike in the world https://techwireasia.com/04/2023/japan-allocates-us7-billion-for-chip-gear-spending-in-2024-the-most-significant-hike-in-the-world/ Wed, 05 Apr 2023 04:00:16 +0000 https://techwireasia.com/?p=227675 According to data from SEMI, Japan said it intends to spend 82% more next year on chip equipment, the largest increase in the world. The aggressive investment complements a US push to reconfigure global chip supply routes and sources. China has also attempted to dissuade Japan from imposing big curbs on exports of semiconductor manufacturing... Read more »

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  • According to data from SEMI, Japan said it intends to spend 82% more next year on chip equipment, the largest increase in the world.
  • The aggressive investment complements a US push to reconfigure global chip supply routes and sources.
  • China has also attempted to dissuade Japan from imposing big curbs on exports of semiconductor manufacturing equipment.
  • In the 1980s, Japan was the world’s largest chip producer, accounting for over 50% of global semiconductor production. Then came the early 2000s when Japan faced challenges in shifting business models from traditional vertical integration (IDM) to horizontal division of labor (fabless/foundry). Its failure to catch up has led to its downfall in the global chip supply chain, leaving Japan to account for only 9% of the world’s semiconductor production.

    Fortunately, despite no longer being the world’s largest semiconductor market, Japan still maintains a high market share and international competitiveness in product groups such as memory (especially NAND), sensors (especially CMOS image sensors), and power semiconductors.  

    According to the International Trade Association on November 2022, Japan’s approximate share of the global supply of semiconductors and related equipment stands at;

    • Semiconductor Chips (Logic, Micro, Memory, Analog) 6% 
    • Semiconductor Manufacturing Equipment 35% 
    • Semiconductor Materials 50%  

    Japan’s Semiconductor Market Size (Million USD)

    Japan’s Semiconductor Market Size (Million USD). Source: International Trade Association

    Given that since the pandemic the world began shifting its focus toward the semiconductor industry, Japan too began leveraging its position to woo major chipmakers such as Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co. After the announcement that Japan will be tightening its grip on crucial equipment, the country announced its intention to hike up expenditure on chip gears for next year.

    Japan plans to spend US$7 billion on fab equipment next year, which would mark an 82% jump from this year — the largest in the world — according to data from SEMI, a global association of chipmaking equipment producers. Its aim is simple, to boost its position in the worldwide semiconductor market.

    For context, China is forecasted to increase its expenditure by a mere 2%, and Japan’s total amount would even be higher than the combined spending of the Europe and Mideast markets. However, it is fair to note that Taiwan remains the largest spender — US$24.9 billion expected in 2024 — on chip-fabrication equipment. Japan’s move to increase spending by 82% is part of its ambitious program to bring back cutting-edge semiconductor manufacturing, a field ceded to Taiwan, South Korea, and China nearly 20 years ago. 

    The aggressive investment complements a US push to reconfigure global chip supply routes and sources. Last week, Tokyo said it would expand curbs on shipments of 23 types of cutting-edge chipmaking tools, including extreme ultraviolet mask-testers, immersion lithography machines, and silicon-wafer cleaners. 

    The restrictions came as part of a deal with the US and the Netherlands, although Japan has been careful not to refer publicly to the agreement between itself, the US, and the Netherlands. It seems like the export controls will affect a more significant number of Japanese companies than previously expected and require producers of high-end equipment to obtain licenses for all regions. 

    That would give the Japanese authorities oversight of machinery sales to countries that could produce high-end chips for military use in China and elsewhere. Various reports also indicate that a significant number of Japanese companies depend on China for a large part of their growth.

    When Japanese foreign minister Yoshimasa Hayashi recently visited China — the first such trip to China’s capital by a top Japanese diplomat in more than three years, his Chinese counterpart Qin Gang was also present. Qin told Hayashi that the US had in the past tried to “brutally suppress” Japan’s semiconductor industry and was now “repeating its old tricks” against China. 

    “Don’t do to others what you don’t want others to do to you,” Qin said, according to a statement published on China’s foreign ministry website on Sunday. The “blockade” would “only stimulate China’s determination to become self-sufficient,” he added. Please use the sharing tools found via the share button at the top or side of articles. 

    Even with the Netherlands, China has sought to discourage them from participating in the deal. Tan Jian, the Chinese ambassador to the country, warned of “consequences” if it went ahead with restrictions.  

    Pressure from Beijing over the restrictions was also noticeable when the Cyberspace Administration of China, the sector’s regulator, launched a review into imports from the US-based chipmaker Micron Technologies on the grounds of “national security.” 

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