Nintendo video game consoles and Honda-made cars are just two of the consumer products affected by the global shortage of semiconductors. Japanese companies are braced for a year of production disruptions and price rises. For local chipmakers, this is a make-or-break year for an industry already lagging its global peers.

Japan must invest at least ¥1tn ($9bn) in chip development this fiscal year, and trillions more after that, to have any hope of reviving its national industry, says the government’s lead adviser Tetsuro Higashi. Local companies rely on imported chips for almost two-thirds of the total.

This comes despite Japan being home to several chipmakers. Renesas and Toshiba spin-off Kioxia are two of the biggest. Sony and Mitsubishi Electric have semiconductor units. The problem is that most specialise in less sophisticated chips used for storage or camera.

Semiconductors are becoming smaller and more advanced. The types of chips for smartphones use 10-nanometer (nm) chips dominated by Taiwanese and South Korean makers. Those going into cars use 28nm technology mostly made in Taiwan and China. Japan’s Renesas can only mass-produce chips up to 40nm locally.

Local chipmakers have other distractions to contend with. US chipmakers Micron and Western Digital are considering an acquisition of Kioxia. Renesas has yet to recover its output capacity after a fire at its plant in March.

The chip crunch has supported stock prices of Japanese chipmakers in the past year. Shares of Renesas have gained more than 80 per cent. This is in line with gains for Taiwanese peer TSMC. However, Renesas’s shares still trade at a valuation discount of at least 30 per cent to global rivals.

Higashi, also chair emeritus at chip equipment maker Tokyo Electron, notes that it takes at least a decade to build a world-class industry. Even with government support, capital spending will have to remain high for years. Until mass state support is provided, Japan’s chipmakers will continue to underperform global rivals in both technology and on valuation.

If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button ‘Add to myFT’, which appears at the top of this page above the headline