Japan designates semiconductors as ‘critical materials’ among 11 items

By Riyaz ul Khaliq

ISTANBUL (AA) – Amid rising competition in the chip industry, Japan on Tuesday designated 11 items, including semiconductors, batteries, rare earth, natural gas, and fertilizers, as "critical materials."

According to a government decision made by Prime Minister Fumio Kishida-led cabinet, these items "need to be secured stably even in times of emergency."

“The issue of supply chain resiliency for strategic resources that are directly linked to economic security but heavily dependent on overseas sources has been under the spotlight amid China's growing influence and Russia's invasion of Ukraine,” Tokyo-based Kyodo News reported.

Tokyo’s decision to designate the semiconductor industry as critical comes after the US adopted the CHIPS and Science Act in August, under which the federal government will increase spending on domestic research and manufacturing of semiconductors.

However, American technology companies that receive funding through the US Chips Act are prohibited from building cutting-edge chip factories in China for 10 years.

Japan had enacted economic security promotion law in May this year, under which the Kishida government announced the 'critical materials' decision on Tuesday.

Under new directions, “suppliers of such critical materials will be eligible for financial aid for capital investment and stockpiling plans with ministerial approval.”

Other items include machine tools, industrial robots, aircraft parts, ship-related equipment, cloud computing, and permanent magnets.