TOKYO — The Japanese semiconductor industry’s downfall – by way of a slow death over the past quarter century — is undeniable and well documented.
Theories about why Japan’s semi industry fell apart are many. But the single reality facing Japanese semiconductor firms is this: They no longer matter in the global market.
Tracing the top 10 semiconductor sales leaders all the way back to 1990, Brian Matas, vice president of market research at IC Insights, observed that compared to “1990 when Japanese semi suppliers wielded their greatest influence on the global stage and held six of the top 10 positions, last year only Toshiba remained in the top 10.”
Contrary to the Japanese government’s expectations, the wave of consolidations among Japanese electronics giants’ chip divisions over the last few years backfired.
The cartel-like strategy (maintaining prices at a high level and restricting competition) that has historically served Japanese manufacturers so well, didn’t work for Japan’s giant chip vendors in the world market. Instead, all this churn, for all practical purposes, wiped out most memory chip vendors in Japan (except for Toshiba). At best, it has given birth to a handful of minor players.
The following chart shows how the former memory/SoC divisions of Toshiba, Fujitsu, NEC , Hitachi and Mistubishi shrank into Renesas Electronics (merger of chip divisions of Hitachi, NEC and Mitsubishi), Socionext (combined SoC teams from Fujitsu Semiconductor and Panasonic) and Toshiba.
As a result, Japan as a whole, has become a niche player in the global semiconductor market.
Put more succinctly, IC Insights’ Matas said that the Japanese IC market declined 12% in 2015 to $21.2 billion, representing 7% of total worldwide IC sales of $287.1 billion. “As recently as 2010, the Japanese market accounted for 14% of global IC market,” he explained.
The questions now are:
- Is there anything left at Japanese chip companies that anyone in the rest of the world wants?
- Which technologies or product segments, if any, are salvageable, or worth further investment?
- If we grade recent restructuring programs executed by Japan’s semiconductor companies, who comes out on top? Does anybody pass?
- After examining why and how the Japanese chip industry crumbled, who do industry analysts and pundits identify as the biggest culprits?
EE Times went back to Japan and asked locals to dissect what has really gone wrong. We also asked analysts based in the United States to put Japan in the context of the global semiconductor industry.
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