After a decade of underinvestment during which Asia chip industry moved toward Taiwan and China, the Japanese electronics and semiconductors industry is all set to dominate the world market once again.

The automation and electronics industry is one of the leading manufacturing sectors in all industrialized and industrializing countries of the world. Due to its pervasive applicability, the industry is strongly linked to macroeconomic conditions and is also considered a leading indicator of the health of an economy. Growth in the automation and electronics industry affects other end-user industries such as consumer electronics and computers. Due to its strong influence on the economy and other industries, trends in this space are conscientiously tracked. Over the years, the production base of semiconductors has shifted from the developed countries in North America and Europe to the emerging markets of Asia Pacific and Latin America. Low labour costs and unsaturated markets combined with steady economic recovery have made the Asia Pacific region attractive to semiconductors manufacturers. With some of the world fastest growing economies such as China and India belonging to this region, Asia Pacific is expected to exhibit accelerated growth in demand for electronic components and applications.

After a decade of underinvestment during which Asia chip industry moved toward Taiwan and China, the Japanese electronics and semiconductors industry is all set to dominate the world market once again. Although the global market has evinced great interest in products that Japan excels in producing, domestic manufacturers must be wary of the aggressive expansion plans of Chinese and Taiwanese companies. These strategies to extend their reach could also lead to a glut and the Japanese electronics and semiconductors industry has to prepare for that eventuality as well. The market for industrial automation has almost reached saturation in developed countries, including Japan. However, demand still exists in the form of replaceable investments.

The Japanese Government has been favouring policies that attract foreign investors and promote private investment. It is also concentrating on the liquidity trap and the Valley of death phenomenon. The Valley of death is a common term used to refer to Japan lack of success in commercializing its technologies, which has dented the country chances in the global market. As a result, there have been reforms in the country macroeconomic policies, tax structure, and banking sector. The industrial policy in Japan aims at channelling resources to specific industries to ensure that participants in these spaces have a global competitive advantage. The Ministry of Economy, Trade and Industry (METI) has identified biotechnology and nanotechnology as key leading technology areas. Nanotechnology is a much-watched emerging field, as it is expected to be the driver of the 21st century industrial revolution. According to the Manufacturing Industries Bureau under METI, nanotechnology is likely to help companies create next-generation flat screen display and fuel cells using carbon nanotubes as well as develop diamond semiconductors. Fuel cells, home information appliances, and robots are also expected to play a central role in the future economy of Japan, according to METI.