Cultural sensitivity has not always been a strength of Taiwanese businesses, potentially straining Taiwan-Japan relations as Taiwan's semiconductor ventures expand overseas without fully considering local communities' perspectives.
Recently, Powerchip Semiconductor Manufacturing Corp (PSMC) announced it would discontinue its investment plans with Japan's SBI Holdings for a semiconductor fab in Miyagi Prefecture, instead shifting focus to a partnership in India. This decision, meant to alleviate financial pressure, has sparked concern. The first Japanese advisor to Taiwan's government, Takao Nozaki, warned that this move could damage the longstanding friendship between the two nations.
Nozaki, a former journalist and Tokyo City Council district councilor, spoke at a public event at National Taiwan Normal University on September 30, stating: "There are no major problems between Japan and Taiwan now, but there are many small ones." He referred to the disappointment felt by Miyagi Prefecture residents over PSMC's withdrawal.
Taiwan Semiconductor Manufacturing Company's (TSMC) Kumamoto Prefecture fab, located in a rural area, also highlights these concerns. "In such areas, residents hold strong to their traditional culture," Nozaki noted. "If there's no respect for the local people, what will happen if the local mayor loses in an election and an opposing party is elected?" He emphasized that the real issue Taiwan should focus on isn't leadership changes like Shigeru Ishiba's rise, but Japan's economic security and cultural misalignment.
Nozaki pointed out that Taiwan's approach has been "too aggressive," and Japanese citizens in affected areas are unprepared. He called for a more thoughtful and respectful strategy from Taiwanese semiconductor firms in understanding Japanese culture and values.
Potential aftermath and consequences
This sentiment echoes concerns raised by Japanese media. Last week, Nihon Keizai Shimbun reported that SBI Holdings' decision to terminate the joint venture with PSMC caught Miyagi Prefecture officials off guard, leaving them "extremely disappointed and shocked."
In October last year, PSMC and SBI Holdings announced plans to establish JSMC Corporation in the Second North Sendai Central Industrial Park in Miyagi Prefecture, with the Miyagi Prefectural Government preparing land and Northeastern University committing to semiconductor talent development. However, the partnership unraveled as automotive semiconductor demand weakened this year, and PSMC posted five consecutive quarters of losses. According to SemiconVoice, the project was stymied by PSMC's refusal to act as a guarantor for 10 years of continuous operation, as Japan's Ministry of Economy, Trade and Industry (METI) required.
Industry insiders revealed that PSMC is now focused on its collaboration with India's Tata Group. This collaboration does not require capital investment, only consultancy and fab IP support. This arrangement, seen as less risky, contrasts sharply with the Japanese venture's complexities.
PSMC clarified the situation in a recent statement, explaining that its role in the Miyagi project was purely consultative, offering fab IP, training, and technology transfer, with no plans for ownership. The company applied for METI subsidies but was unable to meet the requirements, as SBI lacked experience in the semiconductor industry and PSMC, as a publicly listed Taiwanese company, could not guarantee the operation of a plant in which it held no significant share.
Despite this, the sudden end of the partnership could chill Japan's local governments' enthusiasm for semiconductor investments. As Nikkei pointed out, the collapse of this venture may lead Japan to take a more cautious approach toward future foreign investment in semiconductor projects.
