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Japan’s technological prowess shines in the manufacturing sector, where industries such as machine manufacturing and automobile manufacturing cater to strong domestic and international demand. The vast majority of the products manufactured by these industries require electronic components to function and hence constitute a prime market for the electronics industry. Two key segments of the machine manufacturing industry are the industrial equipment segment and the electronic communication segment, both of which heavily implement electronic components in their products.

Satisfying the broad demand for industrial machinery

Industrial machine manufacturing is one of the most important segments in Japan’s manufacturing industry that is related to electronics, outputting equipment of Japanese yen. Demand in industrial machinery comes from numerous areas of Japan’s economy, with the construction sector being one of the segments’ largest clients that manifested sustained demand in 2024. From excavators to cranes and tunneling machines to smaller equipment, the list of essential products equipped with electronic components is long. Other industries that showed high demand for industrial machinery include the agriculture industry, the chemical industry, and the automobile and auto parts industry. Industrial machinery made in Japan is furthermore highly coveted internationally, with roughly half of the total production value slated for export.

Sustained need for electronic and telecommunication equipment due to digitalization

Electronic and telecommunication equipment manufacturing is the second major segment in Japan’s machine manufacturing industry. Combined with the industrial machine manufacturing segment, they comprise roughly of the industry’s entire value. Driven by digitalization, electronic and telecommunication equipment is likewise in high demand in the vast majority of domestic industries. The largest contractor in 2024 was the finance and insurance industry, in need of various electronic equipment, from ATMs to biometric authentication devices, IC card readers, and IoT devices or sensors, to name just a few examples. Other large contractors with sustained demand included the Ministry of Defense, the electric machine manufacturing industry, and the telecommunications industry. The electronic and communication equipment manufacturing industry also serves large demand overseas, with roughly half of the industry segment’s production value intended for export.