Columns
Rare earths, semiconductors and long-term industrial policy are reshaping Japan’s revival and sharpening pressure on Korea to respond.
Kim Dong-ho
The author is an editorial writer at the JoongAng Ilbo.
Japan’s remote island of Minamitorishima lies about 1,850 kilometers (1,149.5 miles) from Tokyo. Though only about 6 kilometers in circumference, the tiny island has become central to Japan’s economic security strategy because of the rare earth deposits believed to lie beneath the surrounding seabed. The government aims to begin commercial mining in 2028, but formidable technical challenges remain. After a successful test this year, Japan plans to recover 350 tons of deep-sea mud per day next year to verify whether rare earth elements can be extracted for economic purposes. Minerals such as neodymium and dysprosium are essential for semiconductors, EVs, defense systems and robots.
The challenge extends beyond extraction. Refining rare earths produces wastewater and other pollutants, making large-scale production environmentally difficult. The United States possesses significant reserves at the Mountain Pass mine in California, but environmental regulations have long constrained production. China seized that opportunity. Since late Chinese politician Deng Xiaoping declared in 1992 that “the Middle East has oil [while] China has rare earths,” Beijing has developed the sector into a strategic industry and increasingly used export controls as geopolitical leverage.
Japan’s determination to secure its own supply reflects growing concern that dependence on Chinese rare earths could undermine both its advanced manufacturing sector and its national security. As the era of physical AI accelerates, demand for semiconductors, batteries, robots, EVs and defense equipment will continue to rise. A disruption in rare earth supplies would reverberate across entire industries. This explains why Japan has strengthened economic security legislation since 2022 while accelerating efforts to secure critical minerals, protect key technologies and reorganize supply chains.
Economic security has also become a catalyst for Japan’s broader revival. Since the launch of “Abenomics,” defined by a weak yen and expansive fiscal policy, in 2012, Japan has pursued monetary easing, fiscal stimulus and structural reform to escape decades of deflation. Real economic growth remains modest, hovering around 1 percent, but nominal growth has exceeded 4 percent for three consecutive years. Stock market reforms, rising wages and improvements in corporate governance all reflect a country no longer defined solely by its “lost three decades.”
The final piece of that transformation is Japan’s new growth strategy. Under its vision of building a “strong Japan,” the government plans to invest 3.5 quadrillion won ($2.3 trillion) by 2040 across 17 strategic sectors, including AI, semiconductors, information and communications, defense, aerospace, energy, critical minerals and quantum computing. Rather than relying on conventional stimuli such as infrastructure spending or cash handouts, Tokyo is linking industrial policy, technology, resources and national security into a single long-term strategy. Combined with Japan’s strengths in basic science, materials, parts and manufacturing equipment, sustained government support could have a significant impact.
The semiconductor industry is also regaining momentum. TSMC‘s plant in Kumamoto has become a cornerstone of efforts to rebuild Japan’s semiconductor ecosystem. Rapidus plans to begin mass production of 2-nanometer logic chips next year, and Kioxia has recently emerged as Japan’s most valuable listed company, symbolizing renewed confidence in the industry. Japan once surrendered semiconductor leadership to Korea and Taiwan and fell behind during the IT revolution. Today, however, economic security concerns are driving a new sense of national purpose focused on technological self-reliance.
The more pressing question is whether Korea, whose industrial strategy remains heavily centered on semiconductors, can keep pace with Japan’s determination and China’s technological rise. China sets national priorities and pushes companies to compete aggressively. Japan has translated 17 strategic sectors into 62 detailed investment programs with little political controversy.
Korea, by contrast, remains divided over its three megaprojects. Although the government has designated sites and Samsung Electronics and SK hynix have announced 895 trillion won in planned investment for the Honam semiconductor project, questions remain over electricity, water, land, skilled workers and regulatory support. Without those foundations, even ambitious investment plans may not materialize.
Japan’s target year is 2040. China pursued Made in China 2025. Japan now has its own long-term national strategy. Korea also hopes to complete its semiconductor cluster during the Lee Jae Myung administration, but achieving that goal will require institutional reforms and investment. In an era when rare earths, semiconductors, AI and quantum technology determine national power, Korea should place economic security at the center of its national strategy.