Air Liquide is making a strategic move to strengthen Japan's industrial capabilities with the construction of a massive air separation unit (ASU) on Naoshima Island, sources close to the project revealed. The facility, set to become one of the company's largest oxygen production plants in Japan, represents a significant step in the nation's ambitious semiconductor renaissance.

The new ASU will have a daily production capacity of 1,400 tonnes of oxygen and nitrogen when it becomes operational in 2027. The facility, to be integrated within Mitsubishi Materials' Naoshima smelter and refinery, will play a dual role in supporting both the energy transition and semiconductor manufacturing through the production of critical gases including argon and neon.

The spokesperson of Air Liquide, Ronnie Chalmers, Air Liquide Group Vice President for Asia Pacific, emphasized the strategic importance of the project. "This investment demonstrates our commitment to strengthening Japan's industrial infrastructure while addressing the growing demand for essential gases in semiconductor manufacturing," Chalmers told us, acknowledging the crucial financial support from the Japanese government that made the project possible.

The timing of this investment aligns perfectly with Japan's broader semiconductor strategy. The country, which once dominated global chip production with over 50% market share in the 1980s, has seen its position erode to just 10% in recent years. However, our sources indicate that the tide is turning, backed by a massive government investment of ¥3.9 trillion ($25.7 billion) between 2022 and 2025.

The project's significance extends beyond semiconductor production. The ASU will support copper manufacturing, a critical material for renewable energy technologies including solar panels, wind turbines, and electric vehicle components. This dual-purpose capability positions the facility as a cornerstone of Japan's industrial strategy.

As the global data centre market is projected to surge from $220 billion in 2022 to $428 billion by 2030. This growth, driven by AI and advanced computing needs, is expected to create sustained demand for semiconductor products. The announcement follows TSMC's recent commitment to build a second chip factory in Japan by 2027, with investments exceeding $20 billion. It suggests that Air Liquide's new ASU facility will play a vital role in supporting this expanding semiconductor ecosystem, helping Japan secure its position in the global supply chain between the U.S. and China.

This strategic investment underscores Japan's determination to revitalize its semiconductor industry while supporting the global energy transition, marking a significant milestone in the country's industrial development strategy.