Marc Filippino

Semiconductors have become one of the hottest products on the planet. And the US and C are trying to one-up each other in semiconductor production. Japan finds itself stuck in the middle of this chip war. But it sees an opportunity. A Japanese state-backed fund this week agreed to buy one of Japan’s leading semiconductor equipment makers for $6.4bn. The company is called JSR.

Leo Lewis

Basically, if you’re in the chip game, you know this company.

Marc Filippino

That’s the FT’s Asia editor Leo Lewis. He’s based in Tokyo.

Leo Lewis

It’s not just that, you know, Japanese manufacturers are using this. Manufacturers everywhere in the world are using it, including, you know, in C and a lot of the clients are in the US. And one of the ideas has been that this company could expand and grow on that global position more easily if it got the government backing and the ability to kind of move with that kind of implicit endorsement of being bought out by this government-backed fund.

Marc Filippino

JSR started out by specialising in synthetic rubber. Over time, it expanded into speciality chemicals, and one of those chemicals has become a crucial part of manufacturing semiconductors. Now, going back to the deal, Leo says that the government isn’t going to be in control of JSR, but they’re gonna have a decent amount of influence.

Leo Lewis

It’s not gonna sit on the board. It will be sitting there in the background, sort of giving its nod either expressly or perhaps behind the scenes, to the kind of expansion and consolidation that this company now is likely to lead.

Marc Filippino

Now, we should mention that Japan doesn’t usually intervene in the private sector like this. This government-backed fund has been used to rescue companies before, but it hasn’t really put its muscle behind a powerhouse like JSR. Leo says that this deal might be a turning point.

Leo Lewis

I think that what we’ve been looking for is some evidence that Japan really is, the Japanese government is really looking at winners now. This is really about saying, look, we have got this situation where the US and C are at loggerheads. That’s probably going to last a long time. We, Japan are to some extent sitting in the middle of that and the answer is we’ll, we need to be big and we need to be strong. And so I think this, you know, if this works out, I think we’re looking at a template rather than an exception of how Japanese industrial policy is gonna work in some of these very specialist areas.