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Japan fights for lead in advanced chip and EV materials

Sumitomo Metal moves to supply power semiconductor wafers for electric cars

Sumitomo Metal Mining will begin making silicon carbide wafers by March of next year. (Photo courtesy of Sumitomo Metal Mining)

TOKYO -- Japanese manufacturers seek a bigger presence in advanced materials for chips and electric vehicles, a key export sector caught up in the great-power competition between the U.S. and China.

Sumitomo Metal Mining will supply silicon carbide wafers for power control semiconductors, starting this fiscal year. Compared with silicon substrates, those made from silicon carbide can withstand higher voltages. They reduce power loss by roughly 10%, extending the driving range of electric vehicles. Prices are expected to be 10% to 20% lower as well.

Oji Holdings has decided to raise output of film capacitor material for the automotive sector. Nippon Paper and Oji are actively moving into the electric-vehicle space to offset slumping demand for paper.

Nippon Paper Industries is focusing on an environmentally friendly battery material that it created by modifying paper materials. Production of carboxymethyl cellulose will be vastly expanded in November to meet increased demand for materials for anodes used in electric-vehicle batteries. Capacity will roughly quintuple compared with fiscal 2020.

Although Japan is not the juggernaut it once was in chips and consumer electronics, functional materials remain a key sector. Materials account for about a fifth of Japan's exports, government data shows, making it a manufacturing industry on a par with automobiles.

Japan has global market shares of 60% or more in 70 types of advanced materials. It commands a share of 90% or so in photoresist -- vital to chipmaking -- underscoring the nation's lead in the international materials industry.

This strength will mitigate Japanese industry's exposure to supply chain risks posed by Sino-American frictions.

The U.S. is countering China with export restrictions on semiconductors and other advanced tech. But China could leverage its dominance in rare-earth metals should tensions escalate.

Japan, caught in the middle, could be hit with restrictions on rare-earth trade. But its high market share in a host of materials could serve as a deterrent.

China and South Korea are busy expanding their footprints in advanced materials, key to the performance of such products as electric vehicles. Shanghai Energy overtook Japan's Asahi Kasei to become the global leader in lithium-ion battery separators in 2019.

CATL leads the world in electric-vehicle batteries, indicating the mounting strength of Chinese materials manufacturers. The Chinese government has lavished subsidies to encourage the growth of advanced-materials makers.

It is unclear whether Japan will maintain its high share in electric-vehicle materials. For materials serving fields with long-term growth potential, such as quantum computing and biotechnology, collaboration across industrial, governmental and academic boundaries will be a must for increasing competitiveness.

"It's necessary for the government to support strategic actions that are two or three steps ahead [of China and others] in industries and products where Japan has the advantage," said Takahiro Fujimoto, a professor at Waseda University's Institute for Business and Finance.

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