ANALYSIS OF STATE-INDUSTRY INTERACTIONS IN THE JAPANESE IC INDUSTRY BETWEEN 1989-2019

The Japanese integrated circuits (IC) industry rose to global prominence in the 1980s. However, from the 1990s onward, Japanese manufacturers faced a decline in global competitiveness amid rapid market changes and increased international competition. This study investigates the role of the state and institutional frameworks in shaping Japan’s IC industry throughout the Heisei period (1989–2019), a time characterized by economic stagnation, globalization, and technological shifts. Through analysis of business cases, key policies and projects, this study reveals a dual transformation in industrial policy: a growing emphasis on addressing broader challenges and a strategic retreat from direct support of IC manufacturing. State support increasingly focused on upstream research and downstream applications, privileging larger firms within a consistent institutional framework. This study contributes an institutionalist understanding of Japan’s IC policy evolution, highlighting how broader political economy factors redefined the state-industry relationship during this era.