August 13, 2022
The US and Japan will cooperate on semiconductors as part of a new economic dialogue

On Friday, the United States and Japan launched a new high-level economic dialogue aimed at countering China and mitigating the disruption caused by Russia’s invasion of Ukraine.

During the so-called economic “two-plus-two” ministerial meeting in Washington, the two long-time allies agreed to establish a new joint research center for next-generation semiconductors, according to Japanese Trade Minister Koichi Hagiuda.

According to a news briefing, US Secretary of State Antony Blinken, US Commerce Secretary Gina Raimondo, Japanese Foreign Minister Yoshimasa Hayashi, and Hagiuda also discussed energy and food security.

“It is critical that we work together to defend the rules-based economic order, one in which all countries can participate, compete, and prosper,” Blinken said at the opening session.

Blinken stated that recent global events, such as the COVID-19 pandemic and the war in Ukraine, had demonstrated the vulnerability of critical supply chains, while a growing number of countries were struggling with debt burdens as a result of unsustainable and opaque lending practices.

“The People’s Republic of China’s coercive and retaliatory economic practices force countries into choices that jeopardize their security, intellectual property, and economic independence,” he said.

Japan’s Hayashi called Russia’s invasion of Ukraine a serious challenge to the international order and referred to attempts “to use economic influence unfairly and opaquely to realize… strategic interests and to modify the existing international order,” a clear reference to China.

Hagiuda stated that “Japan will quickly move to action” on next-generation semiconductor research, and that Washington and Tokyo had agreed to establish a “new R&D organization” to ensure a secure supply of the critical components.

He stated that the research hub would be open to other “like-minded” countries to participate in.

The two countries did not immediately provide additional details about the plan, but Japan’s Nikkei Shimbun newspaper previously reported that it would be established in Japan by the end of this year to research 2-nanometer semiconductor chips. According to the newspaper, it will include a prototype production line and will begin producing semiconductors by 2025.

“As we discussed today, semiconductors are the linchpin of our economic and national security,” Raimondo said, adding that the officials discussed semiconductor collaboration, “particularly with respect to advanced semiconductors.”

Taiwan now produces the vast majority of semiconductors with dimensions less than 10 nanometers, which are used in products such as smart phones, and there is concern about supply stability if a dispute arises between Taiwan and China, which regards the island as a renegade province.

In a joint statement, the United States and Japan stated that they would collaborate “to foster supply chain resilience in strategic sectors, particularly semiconductors, batteries, and critical minerals.” They promised to “create a strong battery supply chain to drive collaboration among like-minded countries.”

Regarding relations with Russia, Hagiuda stated that he gained US understanding of Japan’s intention to retain its stake in the Sakhalin-2 oil and gas project despite sanctions imposed on Moscow by Washington, Tokyo, and others in the aftermath of the Ukraine invasion.

“There are those who advocate for withdrawal. However, this would mean that our stake would be transferred to a third country while Russia would profit enormously. We explained how maintaining our stake is consistent with sanctions, and I believe we gained US acceptance “He stated.

Mitsui & Co and Mitsubishi Corp, both Japanese trading houses, have a combined 22.5 percent stake in the project.

The meeting on Friday took place at a time of increased tensions over Taiwan.
In a phone call with US President Joe Biden on Thursday, Chinese President Xi Jinping warned against playing with fire over Taiwan, highlighting Beijing’s concerns about a possible visit to the Chinese-claimed island by US House Speaker Nancy Pelosi. more info

On Thursday, the United States House of Representatives passed comprehensive legislation to subsidize the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers.