What Can Taiwan's Semiconductor Industry Learn From Japan?

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Taiwan's semiconductor industry will require major restructuring if it wishes to maintain its competitive edge in the crowded global market.

thediplomat.com, Oct. 28, 2020 – 

On the surface, Taiwan's semiconductor industry is extremely successful. Its champion, Taiwan Semiconductor Manufacturing Company (TSMC), alone holds 51.9 percent of the world's foundry market, dwarfing the 18.8 percent of Samsung, the runner-up. But beneath the surface, Taiwan's semiconductor industry faces challenges that will require major restructuring if it wishes to maintain its competitive edge in the crowded global market. This is where the Japanese experience may prove a valuable lesson.

In 1971, fearing that Japan had too many computer makers to counter American computer giant IBM's introduction of its 370 series mainframe computers, Japan's powerful Ministry of International Trade and Industry (MITI) forced the reorganization of six Japanese computer manufacturers into three pairings: Hitachi-Fujitsu, Nippon Electric-Toshiba, and Mitsubishi Electric-Oki Electric. The goal was to reduce competition among domestic computer manufacturers, giving them more market power and consequently more profits to invest in research. This decision reflects a long-standing obsession with the concept of "excessive competition" in Japan, a phenomenon that has implications for Taiwan's semiconductor industry today.

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