According to a report from Nikkei News, US chip giant Intel will join forces with 14 Japanese companies to develop automation technology for “backend” semiconductor processes such as packaging. The aim is said to achieve automation by 2028, highlighting efforts by both the US and Japan to collaborate and reduce geopolitical risks in the semiconductor supply chain.

Intel’s collaborating partners include Japanese firms such as Omron, Yamaha Motor, Resonac, and Shin-Etsu Polymer, a subsidiary of Shin-Etsu Chemical Industry. The alliance, led by Intel Japan’s Managing Director Kunimasa Suzuki, plans to invest hundreds of billions of Japanese Yen in research and development, aiming to demonstrate technological achievements before 2028.

In the semiconductor field, as “frontend” process technologies such as circuit formation approach physical limits, the focus of technological competition is gradually shifting to “backend” processes such as chip stacking to enhance performance.

Most semiconductor backend processes are currently carried out through manual labor, leading to the concentration of factories in China and Southeast Asian countries with abundant labor force. However, to establish plants in countries like the US and Japan, where labor costs are higher, industry players consider automation technology as a crucial prerequisite.

Led by Intel, the alliance plans to establish backend production lines in Japan in the coming years, aiming for full automation. They also intend to standardize backend technologies to manage and control manufacturing, inspection, and equipment processing procedures under a single system.

According to data from the Japanese Ministry of Economy, Trade and Industry, Japanese companies currently hold a 30% share of the global semiconductor production equipment market and dominate approximately half of the semiconductor materials market.

It is widely expected that the Japanese Ministry of Economy, Trade and Industry will allocate hundreds of billions of Japanese Yen in subsidies for this project. The Japanese government has allocated approximately JPY 4 trillion (around USD 26 billion) from fiscal year 2021 to 2023 to support key industries contributing to economic security.

In April of this year, Japan approved a subsidy of JPY 53.5 billion to Rapidus to assist in backend technology development. Additionally, there are considerations to offer incentives to attract global backend capacity providers to establish operations in Japan.

Japanese and American policymakers are attempting to keep most of the chip manufacturing processes within their own territories, aiming to reduce risks in critical supply chains.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

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• [News] Overseas Expansion of Testing and Packaging Facilities – Japan, Malaysia, and Singapore Emerge as Top Choices
• [News] Rapidus Focuses on Small Clients, Diversifies into Japan to Mitigate US Geopolitical Risks

(Photo credit: Intel)