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March 7, 2025

Japanese Government Supports Corporate Tie-ups to Draw Out Global South Potential

Tokuyama Corporation, a Japanese chemical manufacturer has established a subsidiary in Vietnam to produce a key raw material of semiconductors.

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Semiconductors are not only the bread and butter of industry. They are strategic supplies that affect a nation’s strength. The companies that manufacture essential materials for semiconductors are highly valued, as are the nations where these materials are produced.

Tokuyama Corporation, a Japanese chemical manufacturer headquartered in Shunan City, Yamaguchi Prefecture, has established a subsidiary in Vietnam to produce polycrystalline silicon ( polycrystalline silicon), a key raw material of semiconductors.

What is today Tokuyama Corporation was founded in 1918 as Nihon Soda Kogyo Co., Ltd., in the city of Tokuyama (now part of Shunan City). From its origins as a producer of soda ash, the company has become a manufacturer and seller of a wide range of chemical products. It is one of the global leader in polycrystalline silicon.

In August 2024, Tokuyama Corporation established Tokuyama Vietnam Co., Ltd., in Bà Rịa-Vũng Tà u Province in southern Vietnam. This wholly owned subsidiary diversifies Tokuyama Corporation’s sites for the manufacture, sale, and etching of polycrystalline silicon, the crucial raw material of which the silicon wafers for leading-edge semiconductors are made. Tokuyama Corporation’s project to establish Tokuyama Vietnam therefore qualified for the METI (Ministry of Economy, Trade and Industry)The Global South Future-Oriented Co-Creation Project.

polycrystalline silicon for semiconductors

Tokuyama Corporation has a greater than 20% share of the world market for polycrystalline silicon for semiconductors.

Subsidies support companies hesitant to diversify their production sites

Customers of Tokuyama Corporation’s polycrystalline silicon often asked if, from a business continuity planning (BCP)* standpoint to minimize damage, remain operational, and recover from natural disasters or other emergencies, it was okay for the company to make so critical a material in only one place.

In looking back at how Tokuyama Corporation’s venture in Vietnam came about, executive officer and deputy general manager of the Corporate Planning Division Takeshi Ito offers, “We considered diversifying our manufacturing sites. For a long time, however, we were hesitant because of the difficulty of creating sites in new places.

“We were confident about manufacturing at the Tokuyama Factory (in Shunan). We had a hard time taking the plunge to build another plant, let alone overseas in a developing country. Learning about the subsidy program, though, gave our company a strong push.”

*BCP: Drawing up plans as to how a company will minimize damage in a natural disaster or other emergency, stay in operation, and quickly recover.

Ito

“The Global South subsidy,” says Ito, “gave us the backing we needed.”

The subsidy he speaks of is provided by the Japanese government’s METI-led Global South Future-Oriented Co-Creation Project. This Global South subsidy provides up to ¥4 billion for capital investment and other expenses for business projects beneficial to Japan and the partner country.

Global South countries benefit from assistance in building an industrial base, providing technology education, and solving social issues. Benefits for Japan include enhancing industrial structures through innovation, expanding advanced technology overseas, and strengthening supply chain resilience. Projects are selected in the categories of large-scale demonstration, feasibility studies(FS), and small-scale demonstration, and more than 150 projects are under way.

Vietnam is ideal for business expansion

Ito cites four points to explain why Tokuyama Corporation chose Vietnam for its polycrystalline silicon factory: (1) political neutrality; (2) national character; (3) clean energy; (4) ambitious local government.

“The issues arising from friction between the US and China made us want to avoid the impact of politics on our business. Vietnam came to mind as a country where we could conduct business in the absence of politics. What’s more, our Tokuyama Factory features technical interns from Vietnam whose meticulous work habits have impressed us.

“Vietnam has the image of burning coal for its power generation. But in Bà Rịa-Vũng Tà u Province, where our subsidiary is located, the main source of power is natural gas and there is a strong push for wind power. Clean energy was for us yet another attraction to expand our business in Vietnam. In its eagerness to attract businesses in the semiconductor industry, moreover, the Vietnamese government made business licensing a smooth process.”

A strengthened supply chain underscores “the significance of building a base … in a Japan-friendly country”

Tokuyama Corporation is installing the latest equipment in its Tokuyama Vietnam plant, where it will employ around 200 local personnel while steadily expanding the subsidiary’s business. Contributing to the local community through employment and human resources development is central to Tokuyama Corporation’s activity in Vietnam.

“I expect,” says Ito, “that we will be keeping the manufacturing technology for leading-edge products in Japan. To ensure the stable supply of high-quality products to customers, however, the significance of building a base overseas, and in a Japan-friendly country, is great.” Tokuyama Corporation, he adds, also has high expectations for its Vietnam subsidiary as a bridgehead into other fast-developing Global South countries, such as India.

Tokuyama Vietnam’s plant

Vietnam’s Phu My 3 Specialized Industrial Park is the setting for Tokuyama Vietnam’s plant.

Projects worldwide span infrastructure to prosthetics

Why is the Japanese government tying up with corporations to engage with the Global South?

Masayoshi Arai, METI’s director-general for the Trade Policy Bureau, speaks of the need for business alliances with Global South countries. “Amid sharpening confrontations between nations, there is a need for a new international order encompassing the Global South nations given high expectations for their growth, a need, that is, to build new relations and establish new economic rules between countries. For economic security, as well, there is a clear need to forge alliances within the Global South given its natural resources and energy.” Economic security makes it essential to correct imbalances in supply chains and to make supply chains more resilient. To those ends, it is increasingly necessary for companies, such as Tokuyama Corporation, to extend their operations into the emerging nations of the Global South.

Traditionally, economic support for emerging nations has centered on official development assistance (ODA). Encouraging tie-ups between corporations and governments and partnerships with Global South nations will broaden and deepen relationships with the Global South to the benefit of all.

Road paving and infrastructure company IKEE Co., Ltd., headquartered in Matsuyama City, Ehime Prefecture, and led by its president, Shu Nishiyama, was selected for a METI Global South subsidy for its standardized road maintenance and repair system demonstration project in West Africa. The West African nations of Nigeria and Ghana have few paved roads, and preserving those roads is made difficult by climate and other factors. IKEE aims to popularize a standardized system that integrates road survey and inspection and the proposal and implementation of maintenance and repair processes.

IKEE

IKEE seeks to introduce a standardized road maintenance and repair system in West Africa.

Another Japanese company, Tokyo-based Instalimb, Inc., manufactures and sells low-cost, high-quality, 3D-printed prosthetics and is undertaking a project to solve prosthetics supply shortages in India. It is introducing India’s principal manufacturers of prosthetics to digital transformation (DX) and thereby innovating their manufacturing and administrative processes.

Instalimb

Instalimb manufactures and sells low-cost, high-quality, 3D-printed prosthetics.

Japan’s government backs participation by Japanese corporations in rulemaking in the Global South

According to a METI representative, “METI will be closely watching how much partner countries are being helped and to what degree and of what nature their feedback to Japan is. We want companies to take an active role in local rulemaking and in pushing for the adoption of those rules as de facto standards. We intend to provide as much support as possible and to maintain contact with all concerned parties.”