Japan goes all in on chips

This is an audio transcript of the FT News Briefing podcast episode: ‘Japan goes all in on chips’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, June 28th, and this is your FT News Briefing.

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Sierra Leone’s president has locked down a second term. And yesterday’s US Supreme Court ruling might have an enormous impact on the 2024 elections. Plus, Japan is snapping up a company it thinks is indispensable to the global semiconductor industry. I’m Marc Filippino and here’s the news you need to start your day.

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Sierra Leone’s president just won himself another five years in office. The country’s electoral commission announced yesterday that Julius Maada Bio received 56 per cent of the vote. This was a rematch of the 2018 election, with Bio running against former central bank governor Samura Kamara again. The opposition is rejecting the results, though. Kamara said they weren’t credible, and international election observers from the EU said there was, quote, “a lack of transparency at critical stages”.

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The US Supreme Court came out yesterday with a huge ruling on the way elections are run. The high court said that state courts should have the authority to review state election laws the way they do now. Here to break this down is the FT’s Stefania Palma. Hi, Stefania. 

Stefania Palma
Hi, Marc.

Marc Filippino
All right. In non-legalese language, what exactly is this case about?

Stefania Palma
So the case stems from North Carolina lawmakers trying to appeal a decision that was taken by lower courts in the states that had essentially ruled that electoral maps that had been drawn up by North Carolina lawmakers were unconstitutional because they were drawn in a way that would have likely favoured Republican candidates in the states.

Marc Filippino
Gerrymandering — that’s what that’s called, right?

Stefania Palma
Correct.

Marc Filippino
So why did the court rule against the GOP plan in this case?

Stefania Palma
The North Carolina lawmakers were trying to argue in line with a legal theory called the independent state legislature theory, which essentially says that lawmakers should be free to regulate elections with little oversight from state courts. And some critics had actually warned that taking on quite an extreme version of this principle could have actually allowed lawmakers in US states to even potentially completely ignore voters and maybe perhaps install their own group of electors. And these are the votes that are actually counted by Congress to certify US presidential elections. So the stakes were very, very high in terms of how broad the Supreme Court was going to go with this opinion.

Marc Filippino
But what does this say about the make-up of the Supreme Court itself? I mean, the lawsuit was brought by Republicans to a predominantly conservative court. I mean, what do you take away from that?

Stefania Palma
Some people I’ve been speaking to about this, some legal experts, were actually quite surprised because in recent years, the Supreme Court has not necessarily been very protective of voting . . . voters’ rights. But this case involving North Carolina and another case on which it ruled earlier this month with regards to a district map in the state of Alabama — both of these decisions actually point to the fact that, as one professor I spoke to put it, the Supreme Court is protecting states’ rights, but it is also protecting voting rights.

Marc Filippino
Why is this case important for someone who hasn’t been following this and they’re just tuning into this today?

Stefania Palma
I think this case is fundamental, obviously, in the lead-up to a presidential election at a time when the US is increasingly polarised from a political standpoint. But I think the debate around a case like the one involving North Carolina and Alabama as well really does touch upon basically some of the most hot-button issues in the US, which includes issues like race, access to voting. And this is something that, you know, it’s not a new theme in the US. There’s been a long history of debate around whether certain states have been drawing up maps that don’t respect voting rights on an equal scale. And the most powerful courts in the US making such statements really speaks volumes in terms of how the tone of the debate around voting rights is being set both politically and legally.

Marc Filippino
Stefania Palma is the FT’s US legal and enforcement correspondent. Thanks, Stefania.

Stefania Palma
Thank you.

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Marc Filippino
Semiconductors have become one of the hottest products on the planet. And the US and China are trying to one-up each other in semiconductor production. Japan finds itself stuck in the middle of this chip war. But it sees an opportunity. A Japanese state-backed fund this week agreed to buy one of Japan’s leading semiconductor equipment makers for $6.4bn. The company is called JSR.

Leo Lewis
Basically, if you’re in the chip game, you know this company.

Marc Filippino
That’s the FT’s Asia editor Leo Lewis. He’s based in Tokyo.

Leo Lewis
It’s not just that, you know, Japanese manufacturers are using this. Manufacturers everywhere in the world are using it, including, you know, in China and a lot of the clients are in the US. And one of the ideas has been that this company could expand and grow on that global position more easily if it got the government backing and the ability to kind of move with that kind of implicit endorsement of being bought out by this government-backed fund.

Marc Filippino
JSR started out by specialising in synthetic rubber. Over time, it expanded into speciality chemicals, and one of those chemicals has become a crucial part of manufacturing semiconductors. Now, going back to the deal, Leo says that the government isn’t going to be in control of JSR, but they’re gonna have a decent amount of influence.

Leo Lewis
It’s not gonna sit on the board. It will be sitting there in the background, sort of giving its nod either expressly or perhaps behind the scenes, to the kind of expansion and consolidation that this company now is likely to lead.

Marc Filippino
Now, we should mention that Japan doesn’t usually intervene in the private sector like this. This government-backed fund has been used to rescue companies before, but it hasn’t really put its muscle behind a powerhouse like JSR. Leo says that this deal might be a turning point.

Leo Lewis
I think that what we’ve been looking for is some evidence that Japan really is, the Japanese government is really looking at winners now. This is really about saying, look, we have got this situation where the US and China are at loggerheads. That’s probably going to last a long time. We, Japan are to some extent sitting in the middle of that and the answer is we’ll, we need to be big and we need to be strong. And so I think this, you know, if this works out, I think we’re looking at a template rather than an exception of how Japanese industrial policy is gonna work in some of these very specialist areas.

Marc Filippino
Leo Lewis is the FT’s Asia business editor. He’s based in Tokyo.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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