“The [Japanese] government will soon launch a new initiative, the updated version of ‘Remodeling the Japanese Archipelago’ to promote digital transformation,” spoke Akira Minamikawa, a senior consulting director and semiconductor analyst at British research firm OMDIA. “It is a plan to transform Japan, which is far behind in this field,” he explained.

“Remodeling the Japanese Archipelago” was a policy platform set out by then Prime Minister Kakuei Tanaka 50 years ago, in 1972, near the end of Japan’s high economic growth period. The plan was formulated by Keiichi Konaga, who served as the executive assistant to the prime minister and was sent from the Ministry of International Trade and Industry (now the Ministry of Economy, Trade, and Industry).

The successors of Konaga at the current ministry are now in the process of formulating the Reiwa (present era) version of the remodeling scheme, which includes measures to bolster Japan’s semiconductor industry. “Behind this [scheme] is the United States. Now that a lasting high-tech Cold War with China is inevitable, the U.S. government wants Japan to strengthen its digital transformation and semiconductor powers,” said Minamikawa.

The share of Japanese semiconductor manufacturers, which exceeded 50% worldwide in the early 1990s, fell to 10% in 2020. While most lament the decline of the Japanese semiconductor industry, there is a company that still sees a chance for a revival; it is Nippon Telegraph and Telephone Corp. (NTT), Japan’s largest telecommunications company.

In recent years, scientists have become more aware of the limitations of microfabrication technology that have contributed to improving the performance of CMOS (complementary metal oxide semiconductor), which is the mainstream design for semiconductors. NTT has broken this barrier.

Data Explosion and Climate Change

Moore’s Law perceives that the number of transistors on a microchip doubles every two years, and accordingly, the performance of CPUs (Central Processing Units) and memory function has improved dramatically, especially in the last 30 years. The ICT (Information and Communication Technology) industry emerged, leading to the rise of “GAFA (Google, Apple, Facebook, Amazon)” and other tech giants.

However, because of rapid progress in miniaturization, the line width of a state-of-the-art semiconductor integrated circuit is approaching the level of atoms, which are the smallest fine particles. As a result, the rate of advancement of computer performance has peaked, and at the same time, power consumption per computational complexity has stopped declining.

Meanwhile, the start of commercial services of 5G (5th generation mobile communication system) and the spread of AI (artificial intelligence) and IoT (Internet of Things) have led to an exponential increase in the amount of data on the ICT network. According to the U.S. research firm IDC, the amount of data in the world, which was 33 zettabytes in 2018 (zetta is 10 to the 21st power), is expected to increase 5.3-fold to 175 zettabytes in 2025.

The concern is its impact on climate change. According to the British oil company BP, about 60% of the world’s electricity supply depends on thermal power generation such as natural gas and coal. Without technological innovation to reduce the power consumption of ICT equipment, the promotion of digital transformation, which is a growth area, will be an obstacle to climate change countermeasures.

NTT is at the forefront of developing a technology that would solve this dilemma. NTT’s new technology is called “photonics-electronics convergence” which combines the functions responsible for electronic data processing and optical communication transmission to drastically cut power consumption, all the while paving the way for ultra-high-speed data processing.

NTT has now set its eyes on its practical application. With this as the core technology, NTT is proposing an initiative called IOWN (Innovative Optical and Wireless Network) which introduces optical-based technology to all devices such as networks, terminals, and semiconductors, that will make possible next generations of services. In November 2020, at an event to introduce the company’s IOWN research, NTT President Jun Sawada emphasized that its photoelectric fusion technology and IOWN “will be a game-changer that will promote social change.”

Behind NTT’s efforts is also the fact the company is a large energy consumer, accounting for about 1% of the electricity demand in Japan. The company aims to become carbon neutral in 2040, reducing greenhouse gas emissions to virtually zero. It plans to achieve 45% of the reduction through IOWN’s power-saving effects and the 45% through renewable energy.

The Ultra-Powerful Device

The purpose of developing photonics-electronics convergence technology is not only to reduce power consumption but alsoto make “ultra-powerful devices,” according to Executive Vice President Katsuhiko Kawazoe at NTT, who heads the company’s research and development planning.

To realize new applications that will be created using various data collected from the real world, it is necessary to break through the limits of the current electronics. To do this, “we need a powerful and general-purpose hardware that can process optics that far exceeds the current performance,” Kawazoe said.

NTT announced that in 2019 and 2020, it succeeded in developing technologies such as optical transistors, all-optical switches, and optical logic gates that can lead to practical applications of photonics-electronics convergence.

An optical transistor is an element that converts an electric signal into an optical signal, an optical signal into an electric signal, and converts and amplifies the input optical signal into another type of light. “In the past, we needed a large device, but now we can do this with a coin-sized chip,” Kawazoe said.

The all-optical switch can switch on and off the optical signal and change the destination of light. The optical logic gate enables ultra-high-speed processing. NTT aims to significantly improve the performance of ICT infrastructure by building an “all-photonics network” which are equipped with these photonics-electronics convergence devices.

In January 2020, NTT jointly established the “IOWN Global Forum” headquartered in Massachusetts, with Sony and Intel. One of the founders of Intel is Gordon Moore, who posited the Moore’s Law. Kawazoe believes that it is significant that Intel, a company well versed with semiconductors, joined the IOWN project from the early stages. As of September 2021, 75 companies, organizations, and research institutes from Asia, the U.S., and Europe planned to participate in the forum. NTT is hoping to start introducing IOWN by 2026.

Minamikawa says NTT “has a significant lead” in the development of photonics-electronics convergence. “It is the fruit of many years of basic research.” But he points out that there are challenges. “It is still unclear by how much it can reduce the cost of [manufacturing] semiconductors.”

Moreover, if the main function of the photonics-electronics convergencedevice is not the brain like the CPU but in the interface (contact point) with the internal device group and the communication network, the market size may be limited.

According to World Semiconductor Trade Statistics (WSTS), the size of the global semiconductor market is about 48 trillion JPY (as of 2020). Of this, memory accounts for 13 trillion JPY and microprocessors installed in personal computers account for 7.6 trillion JPY. In comparison, Minamikawa estimates photoelectric fusion-related devices to total around 1 trillion JPY.

Last Chance for Japan’s Semiconductor Industry

However, it is certain that photonics-electronics convergence has great potential. As the name indicates, even if IOWN is put into practical use, data processing by electricity and electronics will continue for a while in tandem with light.

“The devices (CPU, etc.) for accumulating and processing electronic data will be manufactured by the semiconductor plants of TSMC (Taiwan Stacked Circuit Manufacturing). The interface of the equipment, on which these parts will be mounted on, and installed onto the network will be replaced with optical processing. We want this part of the new production system to be done in Japan. It is necessary for Japan to take on some of the production bases such as foundries (contracted semiconductor manufacturing companies),” he said.

NTT announced in April 2021 that it would acquire Fujitsu’s semiconductor design subsidiary with a vision to build such a production system.

Since the days of NTT’s predecessor, The Nippon Telegraph and Telephone Public Corporation, demand for telephone exchange switchboard (a type of computer) has supported the semiconductor business of their “family” companies such as NEC, Fujitsu, and Hitachi. But NTT’s presence at that time was beyond that of a mere commercial consumer.

In 1977, the former Nippon Telegraph and Telephone Public Corporation played a leading role as the “family head” of semiconductor research and development, successfully prototyping a 64-kilobit VLSI memory ahead of the rest of the world. Indeed, some view NTT as the true chief of Japan’s semiconductor development.

The Japanese government’s “Green Growth Strategy” is expected to have an economic effect estimated to be around 140 trillion JPY in 2030, about 290 trillion JPY in 2050, and create around 18 million jobs. It is essential to implement new systems such as photonics-electronics convergence devices to achieve this. At the same time, this may be the last chance to revive Japan’s semiconductor industry.