March 30, 2023

US chipmaker Micron will receive up to $320 million in Japanese government grants, the first of an expected series of deals to strengthen supply chains against the disruptive threat from China.

Beijing currently does not compete with Washington and Tokyo in the most advanced segment of semiconductor technology. But Covid-19 disruptions have highlighted the fragility of the supply chain, while Russia’s invasion of Ukraine has fueled fears that China could invade Taiwan, the global center of advanced chip manufacturing.

The Micron deal announced Friday followed months of negotiations between the US and Japan to expand cooperation in semiconductor manufacturing, with the aim of reducing heavy reliance on Taiwanese chipmaker TSMC.

The message came within 48 hours of a meeting in Tokyo between U.S. Vice President Kamala Harris and senior executives from more than a dozen Japanese technology groups to discuss the Chips and Science Act passed by Congress in July and costing $52. billion in grants to support advanced semiconductor manufacturing in the US.

“We need to diversify our dependence on essential supplies, Japan, the United States and the world. We also understand in this regard that no country can meet the world’s demand,” Harris said at the start of the meeting on Wednesday.

Micron, which acquired Japan’s Elpida Memory in 2012, said it would use the investment to develop new Dram memory chips at its Hiroshima plant.

Rahm Emanuel, US Ambassador to Japan, said the Micron deal symbolizes “the investment and integration of our two economies and supply chains. And that will only accelerate from now on.”

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In July, Japan’s Ministry of Economy, Trade and Industry (Meti) announced that it would grant Western Digital, the U.S. manufacturing partner of Japanese chipmaker Kioxia, a grant of up to $92.9 billion ($644 million) to expand production in Japan.

Last year, TSMC said it would partner with Sony to build a $7 billion chip factory in Japan, with half of the investment subsidized by Meti.

Japan’s investments in Micron and TSMC are not intended to support the development of the most advanced chip technology, but an industry director close to the negotiations said Japan and the US were discussing cooperation in that area with IBM.

“The talks with IBM are really about advanced technology and progress is being made,” the person said.

IBM did not immediately respond to a request for comment.