Signal Japan and the EU link subsidies and regulation to pull in chip investment

Summary

Japan and Europe are cited as cases where geopolitical responsiveness and regulatory design have been built into industrial policy. Facing risk from strained Japan-China relations, Japan enacted its Economic Security Promotion Act, designated 11 critical goods and attracted TSMC to a plant in Kumamoto, linking subsidies and regulation to the explicit goal of spreading geopolitical risk. Kyushu's integrated circuit output topped one trillion yen for the first time in 16 years, and government subsidies of four trillion yen in total were disbursed. The EU Chips Act links subsidies and regulatory design to double semiconductor production capacity in the EU, with 43 billion euros of public and private funds and groundbreaking of TSMC's Dresden fab in August 2024. The EU aims to raise its global market share from 9 percent today to 20 percent by 2030. The author observes that neither policy is complete, but both show that clear policy intent and institutional design can attract real investment amid supply-chain uncertainty.