The Role of Semiconductor Distributors in the Japanese Semiconductor Market

The Role of Semiconductor Distributors in the Japanese Semiconductor Market

Akihiko Nagai (Graduate School of Innovation Management, Tokyo Institute of Technology, Japan) and Koji Tanabe (Graduate School of Innovation Management, Tokyo Institute of Technology, Japan)
DOI: 10.4018/978-1-61520-871-5.ch010
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Abstract

In 2009, the global semiconductor market was worth $219.6 billion. Japan has the third largest semiconductor market at $38.3 billion, behind America and China. Japan has a unique semiconductor distribution system based on close relations between semiconductor distributors and major IDMs (integrated device manufacturers), electronics manufacturers, and automobile manufacturers. Because of this, it is difficult for overseas semiconductor manufacturers and fabless semiconductor companies to enter the market. Semiconductor distributors play a significant role in Japan’s semiconductor distribution system. The semiconductor market here has four main characteristics. These characteristics are the reason why Japan’s semiconductor distribution system has developed the way it has.
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Iii. Four Main Characteristics

Figure 1 shows growth trends in Japan’s semiconductor industry and, as in the rest of the world, growth in the domestic market tends to follow a four-year “silicon cycle”.

Figure 1.

Japan’s semiconductor market (Unit: Billion US $) (Source: SIA (Semiconductor Industry Association http://www.sia-online.org/))

The driving force behind Japan’s semiconductor market is demand from electronics manufacturers and automobile manufacturers.

Japan’s semiconductor market has four characteristics.

The first is that the semiconductor market is driven by demand from electronics and automobile manufacturing, the second is that Japan’s major IDMs are competitive in general-purpose semiconductors, the third is that the major IDMs are divisions of major electronics manufacturers, and the fourth is that there is a semiconductor distribution system in Japan. Table 1 shows trends in the market shares of the Japanese semiconductor market held by domestic and foreign manufacturers, with the domestic share being about 2/3 in 2004.

Table 1.
Domestic semiconductor and foreign semiconductor share
   Semiconductors   1991   1995   2004
   Domestic   83.8%   69.8%   64%
   Foreign   16.2%   30.2%   36%
   Market size (billions US $)   15.2   38.8   45.5

(Source: United States Tariff Commission (USTC), Department of Commerce)

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