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From Tokyo, Japan and New Plymouth, New Zealand – this

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is Down to Business English. With your hosts Skip Montreux and Samantha Vega.

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Are you a TikTok user Samantha?

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No Skip, I’m not. But I do know many people who are.

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Oh. Do they live in the US?

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Mm. Some of them. I wonder if they are panicking about the possibility that TikTok will be

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banned in the US in the coming months.

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Ah. You're referring to the bill that just passed in the US House of Representatives?

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I am referring to that, yes.

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The one that if it becomes law would require TikTok’s Chinese parent company

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… its name escapes me at, at the moment.

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Oh that’s ByteDance. Yes that's it, ByteDance, thank you.

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This proposed law would require ByteDance to divest itself from TikTok.

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Right. And if they don’t divest, TikTok will be pulled from App

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stores in the United States. What an unbelievable development.

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Tensions are so high between the US and China, that it’s come to this.

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It is a little frightening that the US, a capitalist country, would

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take such an anti-business measure.

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Well it’s not like China doesn’t ban US companies from doing

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business in their country. Google and Facebook being prime examples.

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True. Very true. But there is no doubt that the gloves are really coming off between the

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two largest economies in the world.

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It kind of reminds me of how the US used to be threatened by Japan’s

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economic dominance during their bubble economy days in the late 1980s.

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Yeah, it’s not quite the same.

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Although economic rivals, Japan and the US were at least on the same page

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in terms of both being democracies.

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Yeah, that’s true too. When did Japan’s economic bubble burst?

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1991? Early 1992.

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Which was followed by three decades of ugly stagnation

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which continues up until today.

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Recently, I did read that Japan just entered an economic recession.

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Well, as a matter of fact, they just narrowly avoided slipping into a technical

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recession in the fourth quarter of 2023.

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But GDP growth this quarter remains very, very sluggish.

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Oh, that’s not good. But there is a glimmer of hope in Japanese economic news.

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Oh. Would this be our topic for today? It would.

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Recently there have been two developments that are turning some heads.

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And what would they be? One would be the Nikkei index on the Tokyo Stock Exchange hit an

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all time record high in February.

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The other is the opening of a new semiconductor fab in Kumamoto by TSMC.

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Oh, the Taiwan Semiconductor Manufacturing Company?

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The leading chip maker in the world opened a plant in Japan?

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They have. That is an interesting development.

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I’d like to hear all about it. So let’s do it.

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Let’s get D2B … Down to Business with Soaring Stocks and

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Semiconductor Success—has the Japanese economy turned the corner?

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Are these two developments, the Nikkei index’s record and the opening of a new

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TSMC semiconductor fab, are they related?

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Not directly, but they do go hand in hand.

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Let’s start with the Nikkei average’s record.

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Sure. What can you tell us about that?

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On February 22nd, the Nikkei index on the TSE broke its previous record high

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that was set on December 29, 1989.

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Cool. What was that, 34 years ago?

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Just over 34 years, yes.

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In December, 1989 the Nikkei peaked at 38,915 points.

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And its new record now stands at 39,098 points.

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So, the Nikkei is up about 1% over 30 years?

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That’s a pretty long recovery, and not much of a gain.

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I suppose that is one way to look at it.

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Especially if you compare it to other indexes around the world.

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The S&P 500 for example increased 1,600% in the same time frame.

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Very interesting. Now, I know that when Japan’s bubble economy burst the Nikkei crashed hard.

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It did. If I remember correctly the Nikkei had lost something like 50% of its value

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by the end of 1992, and Japan entered a very long period of economic stagnation.

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But by the looks of it, that is turning around.

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Well, just because the stock market is performing well doesn’t necessarily

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mean the economy is healthy.

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They are very different animals.

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And what is happening in Japan is evidence of that.

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There is an all time high on the stock market but the economy is

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still in borderline recession. Exactly.

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So what is driving this rally on the Nikkei?

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There are several factors at play.

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First, the weak Yen is actually helping many Japanese manufacturers

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increase their profits. Right.

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A company like Toyota who sells cars in America, is making more money

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because once they bring those US dollars back to Japan, they convert

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to more yen than they did before.

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And at the same time, again because of the weak Yen, foreign

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investors can buy into the Japanese stock market relatively cheaply.

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So a weak yen is one of the drivers.

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What else? CEOs have finally started reinvesting in their companies.

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In human resources and company infrastructure, rather than

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just sitting on a pile of cash. They haven’t been doing that in the past?

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No. Japanese companies have been notorious for keeping retained

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earnings on their balance sheets.

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But now they have more confidence in the future and are loosening the purse

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strings and investing in development.

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Add to that Government support in the form of tax breaks and subsidies.

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An atmosphere of optimism is developing.

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Hopefully this optimism will spill over into the real economy soon.

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And it might just be doing that.

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On March 16th, Some of Japan’s biggest companies, in labor negotiations with

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Rengo, the labor union that represents 7 million workers nationwide, they agreed to

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a 5.28% wage increase for their workers.

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Workers must be happy about that. Not only is it the largest wage increase in 33 years, it’s another sign that

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CEOs are investing in the long term and that economic recovery could be at hand.

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The highest Nikkei in 34 years, the largest wage increase in 33 years,

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something is going on in Japan. Yes!

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Which leads us to the developments in the semiconductor industry.

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You said that Taiwanese based TSMC had opened a chip factory in Japan.

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They have. TSMC, in a joint venture with the Sony Group, Denso, and with subsidies

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from the Japanese government, opened a brand new semiconductor

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fabrication plant in Kumamoto on the Southern Japanese island of Kyushu.

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A joint venture. So they have created a new company?

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Yes, this joint venture is actually a subsidiary of TSMC

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and it goes by the name of JASM.

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Hm. Just on a side note, TSMC is a good example of an initialism and

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JASM a good example of an acronym.

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Right you are, Samantha. What does JASM stand for?

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JASM stands for Japan Advanced Semiconductor Manufacturing.

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And the opening of this JASM factory is big news?

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On several fronts. Did you know there was a time that Japan was a dominant player in the

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semiconductor industry worldwide.

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In fact, the island of Kyushu was once commonly referred to as Silicon Island.

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Oh, is that right? Japan used to be that strong in the tech world.

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They were. And did you know that in 1989, at the same time the Nikkei was reaching its

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bubble era peak, six out of the top 10 global chipmakers were Japanese companies.

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I did not know that. And as of last year, Japan didn’t have any chipmakers on the top 10.

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But this new factory could change that?

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It is certainly a step towards Japan reemerging on the global

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stage in the semiconductor sector.

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JASM’s opening ceremony on February 24th, it was attended by VIPs from across the

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business world, including Morris Chang.

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Mm. Who is Morris Chang? You don’t know much about the semiconductor industry, do you Samantha?

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Should I? It’s not something I’m too worried about.

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Well, for anyone in the industry, Morris Chang is a household name.

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He is a Taiwanese-American electrical engineer and businessman

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who founded TSMC back in 1987.

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Today at 92 years of age, he is a legend.

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Hm. And he attended the opening ceremony of the Kumamoto factory?

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He did. In remarks he made at the ceremony, he said that he strongly believed

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that this factory, along with a second factory JASM is building in Kyushu

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at the end of this year—he hoped that they will mark the beginning of a

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renaissance of chip making in Japan.

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Ah. They’re going to build a second factory in Japan too.

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They are. How much are they spending on all of this?

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The total investment will come to an estimated $20 billion dollars.

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And that is being footed by TSMC, Sony, Denso, and the Japanese government.

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Actually Toyota is putting up some of the money for the second factory, too.

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Toyota. As the world’s largest automaker, I can see why they would have a vested interest

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in a secure supply of semiconductors. No doubt.

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By the time both factories are online 3,400 new tech jobs will have been

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created and the factories will have the capacity of manufacturing 100,000

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12-inch silicon chip wafers a month.

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With the shortage of semiconductors in the world, and with all the

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tension between China and Taiwan, I can see why the opening of these

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fabrication plants is good news.

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That is absolutely true.

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That kind of capacity will definitely help with semiconductor

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supply chain issues globally.

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Not to mention, this is all a great shot in the arm for the Japanese economy.

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Both the opening of the JASM plant in Kyushu and the record performance

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of the Nikkei are positive signs.

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But the Japanese economy does still face some serious challenges.

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Shrinking population, weak consumer spending, high debt to GDP ratio,

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it is a pretty long list of hurdles.

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Mm. I see your point. The Japanese economy is not out of the woods yet.

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No it isn’t. Well, on that note I think it is time for us to get D2V … Down to Vocabulary.

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Let’s start off D2V today and unpack the idiomatic phrase 'the gloves are

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off.' When you say 'the gloves are off,' it means that two parties are

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confronting each other or competing, and they are not holding anything back.

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This phrase originally comes from the world of boxing.

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The reason fighters wear boxing gloves is so they don’t

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hurt their opponent too much.

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The gloves actually soften the blow. That’s right.

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But if they take off their gloves, the power of their

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punch is much more damaging.

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In the opening of today’s report, I said that there was no doubt that the gloves

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were coming off between the US and China.

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In other words, neither country is holding anything back as they confront

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each other on the world stage. It seems the gloves are coming off between Meta and Apple these days.

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Oh? Why do you say that? After Apple launched their Vision Pro virtual reality headset, Mark

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Zuckerberg made a pretty negative Instagram post about it, pointing out

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how Meta’s Quest headset is much better.

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Well, of course he would do that. It’s his job I suppose.

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For an alien. Ah, what’s our next word?

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Next on the D2V list the noun time frame.

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A time frame is the period of time during which something

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happens or is planned to happen.

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It is an important business expression because it refers to the start and the

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end of a specific amount of time in which something happened, or should happen.

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In the report, when Samantha and I were talking about the 30 plus years it

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took for the Nikkei index to increase 1%, I commented that in the same time

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frame, the S&P 500 increased 1600%.

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Skip was commenting that the S&P 500 increased in value 1600% in 30 years.

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Can you give us another business related example Samantha?

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Just imagine a company is transitioning from traditional

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marketing strategies, you know TV commercials, newspaper advertising, etc.

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to a digital strategy. Mm.

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Like developing a presence on social media.

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Yes, like that. It is not an easy task but it’s not one that you want to

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drag out for too long either. So, the CEO might set a time frame of one year to finish the transition.

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Nice example. Here’s another one.

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I understand that you are implementing interactive audio scripts on the D2B

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website so listeners can practice shadowing our conversations.

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Yes, that is right. They are available now actually for new episodes and I’m slowly rolling

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them out for older episodes going back to the beginning of 2023.

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So, what’s your time frame for getting that finished?

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Well, currently I have made it as far back as D2B 288, and my time frame to have

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it all finished is by the end of March.

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Uh, sounds good. Listeners should check them out.

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Yes, they should. What is our next D2V item?

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Our next and final item on D2V today is the idiom ‘to foot the bill for

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something.’ To foot the bill means to pay for something, and it's often used

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when the payment is large or unexpected.

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A good mental image could be a person stepping forward to take

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responsibility for the cost of something.

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Nice image. Near the end of our report, when Skip told me that the total cost

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of the two semiconductor fabs would total $20 billion, I wanted to

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confirm who would be paying that.

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I said, “That is being footed by TSMC, Sony, Denso, and the Japanese government.”

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To which I added Toyota to the list.

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So in other words, those five parties are sharing the cost of the project.

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Exactly. Another example could be the debate over climate change at the moment?

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What debate? There is no debate that climate change is happening.

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Okay yes, you’re right. That debate has been settled.

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But the question now is who is going to foot the bill for all the technology

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required to reduce CO2 emissions.

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Oh that debate. Well it's obvious, those who make the mess should pay for cleaning it up.

17:32

Would you like to help D2B reach more people wanting to improve

17:36

their Business English skills? Be sure to follow D2B on Apple Podcasts, Google Podcasts, Spotify,

17:43

or any place podcasts are found.

17:46

While you are there, leave a rating and a review and tell everyone

17:50

how much you enjoy the show. And that brings us to the end of our report on the soaring stock market

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and semiconductor successes in Japan.

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It is good to hear that Japan is notching up some economic wins, even though

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there are still a lot of concerns. I hope this will all lead to a stronger economy.

18:22

D2B Members, the Bonus vocabulary for today’s episode will be released

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within the next 24 to 48 hours.

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The additional words and phrases we will be going through are: to go hand

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in hand, by the looks of something, different animals, to be borderline, a

18:42

vested interest, and a shot in the arm.

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So, if you are a D2B member and are not subscribed to your D2B Member-only

18:52

RSS feed, be sure to go to your Member account on the website and find it.

18:58

And if you are not a D2B member … do consider becoming one.

19:03

Not only do you get all of our bonus content and have access to

19:08

the Audio Script Library, it’s a great way to support the show.

19:14

To sign up and become a D2B member, just go to d2benglish.com/membership.

19:22

That’s d2benglish.com/membership.

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Thanks for listening everyone. See you next time.

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Take care. Have a comment or question about today’s show?

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Don’t be shy… visit the D2B website or Facebook page, and post

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any comments or questions there. Skip, Dez, or Samantha will be sure to leave a reply.

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Down to Business English... Business News, to improve your Business English.