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Western Digital and Kioxia to get £562 million funding in Japan

The Japanese government is aiming to reinforce its chip supply chain following the semiconductor shortage over the past few years

Japan’s government is set to provide 92.9 billion yen (£562 million) to Kioxia Holdings and Western Digital to help the companies boost their productions and ensure the country has a stable supply of memory chips.

The country has been seeking to solidify its chip supply chain by investing in the sector in recent months. The funding is part of a subsidy intended to revive chip production in the country, at a time when supply chains around the world have been affected by heightened US-China relations and the pandemic.

Kioxia and Western Digital operate a joint flash memory chip plant in Yokkaichi in central Japan. In February this year, Western Digital revealed that certain materials at two of its manufacturing units, operated by its joint-venture partner Kioxia, were contaminated. It was said this affected production operations at both its Yokkaichi and Kitakami flash fabrication facilities. Some analysts predicted NAND flash storage device prices may increase this year by 5-10% because of the contamination.

"We believe the investment will help stabilise advanced memory chip production in Japan," economy and trade minister Koichi Hagiuda said at a press briefing as reported by Reuters. "It will contribute to Japan-U.S. cooperation in semiconductors."

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Additionally, Hagiuda and foreign minister Yoshimasa Hayashi are set to visit the US this week for their first ever talks with US counterparts on broadening security cooperation to industrial and economic policy.

“We appreciate the support of the Japanese government and will continue to produce cutting-edge flash memory which is indispensable for a digital society where cloud services, 5G communications, IoT, AI and automated driving are expanding. We are committed to further advancing the semiconductor industry and contributing to the development of the domestic and global economies,” said Nobuo Hayasaka, president and CEO of Kioxia.

Japanese companies have invested in the US in this sector. Japanese chipmaker Sumitomo Electric, for example, announced last July that it would produce semiconductors for 5G base stations in the US from September, aiming to serve both the US and European markets. The company planned to double its supply capacity to its US operations.

The Japanese government has been investing in other domestic chip projects too. In November 2021, TSMC and Sony declared they would work together to build a $7 billion chip factory in the country as it looked to secure future semiconductor supplies by attracting foreign chipmakers. Some of the initial funding was set to be provided by the government, although it wasn't specified how much.

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