Japan designates chips, batteries strategically critical materials
Japan on Tuesday designated 11 key fields including semiconductors, batteries and rare earths as critical materials that need to be secured stably even in times of emergency.
The issue of supply chain resiliency for strategic resources that are directly linked to economic security but heavily dependent on overseas sources has been under the spotlight amid China’s growing influence and Russia’s invasion of Ukraine.
The designation by Japan’s Cabinet was based on the economic security promotion law enacted in May.
Suppliers of such critical materials will be eligible for financial aid for capital investment and stockpiling plans with ministerial approval.
Other designated crucial materials include natural gas and fertilizers, whose prices have surged since Russia launched its war in Ukraine, as well as anti-bacterial drugs needed for surgery and treatment of infectious diseases.
They also cover machine tools, industrial robots, aircraft parts, ship-related equipment, cloud computing and permanent magnets.
Shortages of semiconductors hit a variety of industries globally including automobiles following the resumption of normal economic activity as the world emerged from the coronavirus pandemic.
The designation comes as Japan tries to restore domestic manufacturing sites while securing necessary materials and manufacturing devices.
The economic security promotion law comprises four pillars, securing a stable supply of important goods, supporting the development of key technologies, screening of basic infrastructure services and withholding certain patents related to sensitive technologies from public view.
Since Japan alone will not be able to build resilient supply chains for strategically important goods, it is believed that cooperation with allies and like-minded partners will be essential.