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Japan and U.K. deepen bilateral ties with new defense and tech pact

May 25, 2023
supply chain

Britain and Japan have upgraded bilateral ties to an “enhanced” global strategic partnership after agreeing on a “landmark” deal to step up defense, trade and technology cooperation.

Rishi Sunak announced £18 billion ($22.5 billion) of new investment by Japanese businesses in the UK, mostly in clean energy, as well as a bilateral “semiconductor partnership” aimed at boosting supply chain resilience amid fears over Chinese interference in Taiwan, reports Bloomberg.

A “Hiroshima Accord” seeks to deepen economic, security and tech cooperation between the two countries, the British premier said ahead of the G7 meeting.

The partnership was announced just before Sunak revealed the Government’s Semiconductor Strategy that will feature £1bn of government spending over the medium term in chips that underpin all modern technologies, from smartphones to cars, according to two people briefed on its contents. The UK’s semiconductor strategy will emphasize the need for the UK to reduce its reliance on semiconductor imports from geopolitically sensitive regions.

However, the amount pledged by the government is tiny compared with Washington’s Chips Act, which involves $52bn of subsidies and incentives to encourage semiconductor companies to build fabrication plants in the US.

The EU has also launched its own “European Chips Act” with €43bn of state aid.

Scott White, co-founder of British group Pragmatic Semiconductor, which is developing small, low-cost plants for its ultra-thin chips, said £1bn seems like the “right level” for a country that has a smaller economy and industrial base than the US or Germany. But he added it has to be “distributed in a relatively small timeframe to make it really useful”.

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