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Sun-Wa Technos (Sun-Wa Technos), Kaga Electronics (Kaga Software), Ryoyo Electro (Ryoyo Electro) and other Japanese semiconductor distributors are accelerating their overseas expansion in the hope of expanding into emerging country markets as their home markets continue to shrink, according to a March 18 news release.

According to Nikkei Asia, Sun-Wa Technos will open an office in Bangalore, India, next month, with plans to supply parts and assembly for industrial equipment. The company hopes to tap into Indian demand, initially from Japanese companies operating in the country, while developing relationships with local companies in the future.

In the fiscal year ending March 2022, its share of overseas sales was 38 per cent, but its chairman Hiroyuki Tanaka said the aim was to increase that figure to between 60 and 70 per cent.

Kaga Electronics will expand its electronics manufacturing services. Late last year, the company invested about 1 billion yen (US$7.5 million) to build a semiconductor substrate factory in Penang, Malaysia.

The company aims to triple its current Malaysian sales to 10 billion yen by 2027. It has also established a plant in Turkey and plans to start producing semiconductor substrates for air conditioners and power tools from June.

In addition, Ryoyo Electro, which handles electronic components for household appliances, has also set its sights abroad. For the fiscal year ending January 2023, its overseas sales will be 45 billion yen, a 2.7-fold increase from five years ago.

Behind the rush to expand overseas sales is the decline of Japan as a consumer of semiconductors. According to world semiconductor trade statistics, the Asia-Pacific region, including China, will account for 58% of semiconductor sales in 2022, followed by the US at 25%, Europe at 9% and Japan at 8%.

Strikingly, Japan's market share was 23 per cent in 2000 and demand for appliance chips from major electronics companies was strong, but the country's presence is now steadily shrinking as companies exit the market and the population declines. Japanese manufacturers used to account for the majority of sales, but now local overseas companies account for around 60 per cent, it was noted.

"While there has been some restructuring among semiconductor trading companies, they still have a tendency to over-compete," said Masatsune Yamaji, an analyst at Gartner Japan. He added: "It is necessary for them to use their strengths, such as having Japanese semiconductor products, to actively seek new demand in these countries."

In response, there have also been comments that major US chip equipment manufacturers have been moving their operations in China to Southeast Asia in recent times, indicating that US export controls have accelerated the technological decoupling of the world's two largest economies.

Data shows that Applied Materials, Panlin Group and Corex Corporation together hold about 35 per cent of the global semiconductor equipment market. According to media reports, since October last year, the three companies have started to transfer non-Chinese employees from China to Singapore and Malaysia, or to increase production capacity in Southeast Asia.

Panlin Group said the company's strategy of being geographically close to its customers has led it to invest throughout Asia, including new technology production facilities in Malaysia, a technology centre in South Korea, and an engineering facility in India; "Given the current geozz pressures, we are increasing our presence in Southeast Asia." Kole also expressed to.

In addition, semiconductor makers such as Samsung, Intel, Ge-Core and UMC all have factories in Southeast Asia and are planning further expansion there.

Analysis shows that, when you count the countries in Southeast Asia, Singapore's human capital, infrastructure and friendly business environment make it a natural and preferred port of call; the Philippines, Malaysia, Thailand and Vietnam have a skilled workforce and talent base that can support the back-end manufacturing of complex chips.

Then there is India, where, in conjunction with local policies, to encourage investment, the Indian government has designated numerous incentives in recent years to lower the threshold for foreign direct investment in order to promote overseas capital investment in India. For example, a US$10 billion incentive package was introduced to attract international electronics manufacturers to set up factories and do business there, while promoting local industries.

Now, along with changes in the international geopolitical landscape and industrial environment, places such as Southeast Asia or India are becoming "treasure troves" for the electronics and semiconductor industry chains to bet on.