Japan designates chips and batteries as strategically critical materials

Japan on Tuesday identified 11 key areas, including semiconductors, batteries and rare earths, as critical materials that must be stably secured even in times of emergency.

The issue of supply chain resilience for strategic resources, directly linked to economic security but heavily dependent on foreign sources, has come under the spotlight amid China’s growing influence and Russia’s invasion of Ukraine.

The appointment by the Japanese cabinet was based on the Law Promoting Economic Security enacted in May. Suppliers of such critical materials are eligible for financial support for capital investments and inventory plans with ministerial approval.

Other key materials include natural gas and fertilizers, prices of which have risen since Russia started its war in Ukraine, and antibacterial drugs needed for surgeries and the treatment of infectious diseases.

They also include machine tools, industrial robots, aircraft parts, marine equipment, cloud computing and permanent magnets.

Semiconductor shortages hit a variety of industries worldwide, including the auto industry, after normal economic activity resumed as the world emerged from the coronavirus pandemic.

The designation comes as Japan seeks to restore domestic manufacturing facilities while securing necessary materials and production equipment.

The Economic Security Promotion Law has four pillars — securing a stable supply of essential goods, supporting the development of key technologies, reviewing basic infrastructure services, and withholding certain patents related to sensitive technologies from the public.

As Japan alone will not be able to build resilient supply chains for strategically important goods, working with allies and like-minded partners is seen as essential.

© KYODO

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