Hello,

The tale of Japan’s rise to dominance in the 1980s and subsequent fall to relative insignificance in the 1990s is as cautionary as it is tragic. The episode has become known among economists as “Japanification”. It’s never nice when your financial collapse is so severe that it essentially becomes the benchmark that all other beleaguered economies are compared against. Whilst the subsequent recovery was tepid, GDP and wage growth are both on the rise, and the yen’s weakness makes Japanese exports more attractive. But Japan also has a more direct means by which it intends on shifting the economy up a gear (or two). 

 

In the 1980s, Japan held a 50% share in the semiconductor industry. This number has dwindled to around 10% in recent years, but it is now experiencing somewhat of a renaissance. The revival has been facilitated through subsidies from the Japanese government that have already attracted large-scale manufacturers such as TSMC to establish plants on the island. Semiconductor demand is higher than ever, and 2024 saw record global sales of $627 billion for the material. Japan is intent on capturing as much of this revenue as it possibly can, while also establishing itself as an indispensable constituent of the new technological age. Whether it can build on recent momentum remains to be seen. 

 

As always, if you wish to discuss anything in further detail, please do get in touch.