TOKYO — The electronics industry, the government and universities will join forces to develop the most advanced basic technology for semiconductors in the world, the Japan Electronics and Information Technology Industries Association said Wednesday.

Eleven electronic companies — including Renesas Technology Corp., Toshiba Corp., NEC Electronics Corp., Fujitsu Ltd., Sony Corp. and Matsushita Electric Industrial Co. — as well as the government and universities will jointly invest 100 billion yen in the project over the next five years, starting in fiscal 2006.

The project was designed to revive the Japanese semiconductor industry, which has lost much of its competitiveness in the international market. The main competition comes from South Korean, Taiwan and U.S. products.

With technological innovations leading to fierce competition throughout the world, semiconductors offer a low profit margin — despite requiring huge investments in research.

The severe competition in the industry has evolved into a war of attrition.

In the 1980s and early 1990s, Japanese makers dominated the market when DRAM semiconductors were indispensable for electronic products.

However, U.S. makers caught up with Japan, and South Korean and Taiwan chipmakers also became competitive, eating into Japan's shares of the semiconductor market and forcing Japanese companies to realign.

Starting in the late 1990s, many companies, including NEC and Hitachi Ltd, spun off their semiconductor divisions. Hitachi and Mitsubishi Electric Corp. established Renesas. Another spin-off was NEC Electronics, which came from NEC Corp.

Fujitsu and Toshiba kept their semiconductor departments within their companies, but even Renesas — the largest producer of semiconductors in Japan — only ranked fourth in the world in 2004 in terms of market share, which was less than one-third that of Intel Corp.

At a press conference in Tokyo on Tuesday, Satoru Ito, head of JEITA's Semiconductor Division and chief executive officer of Renesas, said the entire country had to work together to update technology so that Japanese semiconductors would keep an edge over products from other countries.

Under the plan, after 45-nanotechnology, Japan will develop the next-generation technology — 32-nanotechnology. (A nano is one-billionth of a meter.) Ninety-nano wires is the most advanced technology currently being used by Japanese companies.

Other foreign firms, including Texas Instruments Inc., are believed to have begun research into 45-nano technology, which is expected to be used for digital household appliances and other products in the near future.

With demand growing for system-on-chip technology, which integrates the functions of large-scale integrated circuits, the project will develop technology to standardize production.

If the project succeeds in developing new technologies, the chipmakers will be able to cut research costs and concentrate their efforts and funds on developing technological applications, which would lead to mass production, which would reduce costs significantly.

The joint project will conduct cross-sectoral research for the technology for next-generation semiconductors. It will work toward improving fine processing technology, which is essential for making semiconductors to establish the 45-nano-processing technology.

The companies will shoulder about 75 billion of the total research funds of 100 billion yen, with the remainder to be financed by the government and universities.

Another cross-sectoral development project, the Asuka Project that started in 2001, is scheduled to end this fiscal year.

Industry observers said the Asuka project, aimed at developing nano-65 technology, had produced some results, but the rapid changes in technology might have already rendered such results obsolete.

In light of this, the new project will have to keep forging ahead, because even if 45-nano technology becomes available, only one or two companies in the country would be able to invest in 45-nano products because of the huge amount of money needed to build factories, a chipmaker representative said.

Koki Inoue, a chief researcher at the Economic Research Institute of the Japan Society for the Promotion of Machine Industry, said because of low competitiveness in terms of cost, Japan's semiconductor industry would sink if companies did not step up and improve it. This hints that another round of realignment may occur, depending on the outcome of competition over research with foreign rivals.

Copyright 2005, The Yomiuri Shimbun.