Mitsubishi Chemical Group has unveiled plans to construct a new semiconductor materials plant, aiming for it to become operational by March 2025, as the global competition in semiconductor manufacturing intensifies.

Mitsubishi Chemical, renowned for its expertise in developing semiconductor materials as well as a diverse array of other materials, has yet to finalize key details regarding the location, budget, and specifics of the new plant. However, several domestic media outlets, including the Nikkei, have reported that Fukuoka Prefecture is being considered as a potential site for the facility.

Semiconductor chips have garnered immense global attention, especially in light of supply chain disruptions witnessed during the COVID-19 pandemic. These chips serve as critical components in electronic devices such as phones and computers, making their availability vital for various industries.

While analysts and business leaders have observed a decline in semiconductor demand in 2023 compared to the previous year, their significance has made them a policy priority worldwide.

Mitsubishi Chemical's strategic move aligns with the Japanese government's investments in the domestic semiconductor sector. In 2021, government officials announced their goal of increasing annual semiconductor revenue to over $87.6 billion by 2030. Among the government-backed initiatives is Rapidus, which commenced construction on a new facility in Hokkaido on September 1.

As the government focuses on enhancing the semiconductor sector, local businesses have expanded their semiconductor-related production capacities, while foreign chipmakers, such as Taiwan Semiconductor Manufacturing Co. (TSMC), are showing a keen interest in Japan. TSMC, the world's largest contract chipmaker, is currently constructing a plant in Kumamoto Prefecture and has expressed willingness to expand further in Japan if there is customer demand and government support. Other major players like Micron Technology and Intel have also expressed interest in the market, with significant investments from the U.S., Europe, and South Korea flowing into Japan.

The increased global attention on semiconductors coincides with heightened tensions between the U.S. and China over semiconductor technology. The U.S. has been working to limit China's ability to develop a competitive high-tech industry, leading to a series of export control measures and trade disputes involving major companies.

To address these challenges, the U.S. passed the Chips and Science Act in August 2022, aiming to counter China's chip sector by restricting access to American chipmaking technology. The U.S. has encouraged its allies to adopt similar restrictions, with Japan extending export controls on chipmaking tools.

On the global front, the European Union enacted the European Chips Act, aiming to increase its market share in the semiconductor industry and reduce supply chain vulnerabilities. The U.S. Commerce Department also introduced rules under the Chips and Science law, with dedicated funding allocated for production, workforce development, and research.

While the U.S. was previously a semiconductor industry leader, its production capacity has diminished to 12%. Meanwhile, China's semiconductor market has made significant strides and is closing in on Europe and Japan. Analysts predict that China, with its substantial investments in the sector, could capture 17.4% of the global semiconductor market by 2024.