JAPAN Trends and Developments Contributed by: Haseru Roku, Nagashima Ohno & Tsunematsu
Introduction The year 2024 has been strong for technology M&A in Japan. According to RECOFDATA, an M&A research firm, the number of M&A deals involving Japanese IT companies exceeded 1,100 between January and October. This repre- sents an increase of over 10% compared to the same period last year and more than a threefold increase from a decade ago. Several factors have contributed to this increase. Japan-specific issues, such as the engineer shortage due to the so-called 2025 cliff (dis- cussed below), have played a significant role. Global trends like the rise of generative AI and the rapid increase in electric vehicles (EVs) aimed at achieving carbon neutrality have also had a substantial impact. Additionally, M&A transactions related to semi- conductors and data centres were significantly driven by the USA-China confrontation, eco- nomic security demands, and geopolitical risks. These factors have triggered many technolo- gy-related deals in Japan, a country that pos- sesses mature technology and markets and is positioned between the USA and China. In the following sections, we will outline technol- ogy M&A cases involving Japanese companies in 2024, categorised by sector, and discuss their backgrounds, trends, and legal issues. AI and Semiconductors: Navigating Between the AI Era and Geopolitical Risks The advent of the AI era has provided a signifi- cant tailwind for investments and M&A activi- ties in Japan’s semiconductor and data centre sectors. Globally, the demand for AI semicon- ductors is rapidly increasing, leading to supply shortages. Amid the USA-China confrontation and geopolitical risks, there is a push to build
supply chains with national security in mind. This shift has heightened international expectations for Japan, known for its geographical stability, concentration of semiconductor component manufacturers, and advanced manufacturing technologies. Major investments and joint ventures in semiconductor industry In February 2024, the Kumamoto factory of Japan Advanced Semiconductor Manufacturing (JASM) – a joint venture between Taiwan Semi- conductor Manufacturing Company (TSMC), Sony Semiconductor Solutions, DENSO COR- PORATION, and TOYOTA MOTOR CORPORA- TION (“Toyota”) – was officially launched. Con- struction of a second plant is expected to begin in 2024, with a projected monthly production capacity of over 100,000 semiconductor chips. These chips will be used in automotive, indus- trial, consumer, and high-performance comput- ing applications. Conversely, also following the pattern of a joint venture between a Taiwanese semiconduc- tor company and its Japanese counterparty, SBI Securities (SBI), a major Japanese securi- ties company, and Powerchip Semiconductor Manufacturing Corporation (PSMC), a major Tai- wanese semiconductor foundry, signed an LOI in October 2023 to establish a semiconductor manufacturing joint venture in Japan but they announced the dissolution of their partnership in September 2024. The two companies have conflicting views on the reasons for the split, highlighting that cross-border joint ventures in the semiconductor industry in Japan can still sometimes be challenging and are not always positive.
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