Japanese companies are key suppliers of components used in chip making. WSJ Tokyo bureau chief Peter Landers joins host Zoe Thomas to discuss what the Japanese government is doing to make these companies indispensable to the global market. Plus, online scammers are creating copycat versions for small businesses. We’ll tell you how they do it and what it means for small business owners.
Sign up for the WSJ's free Technology newsletter.
Learn more about your ad choices. Visit megaphone.fm/adchoices
[00:00:00] Zscaler extended its Zero Trust architecture with powerful AI engines trained by 500 trillion daily signals to prevent ransomware and AI attacks that target business. Zscaler Zero Trust plus AI. Learn more at zscaler.com slash zero trust AI. Welcome to Tech News Briefing. It's Thursday, June 13th.
[00:00:26] I'm Zoe Thomas for The Wall Street Journal. Online scammers are using the photos, videos and social media posts of legitimate small businesses to steal their customers. We'll find out about the impact this is having on owners and what they're doing to try and stop it.
[00:00:43] And then, Japanese companies, including those known for making camera film or printing magazines, have become key suppliers in the global chips market. We'll find out how they got this position and what the Japanese government is doing to make these companies indispensable to the semiconductor supply chain.
[00:01:06] But first, technology has expanded the reach of even the smallest businesses. Now they can easily court customers across the globe. But evolving technology has also boosted opportunities for copycats, scammers that assume the identities of legitimate businesses and steer customers to cheap knockoffs or simply take their money.
[00:01:28] Here to speak more about this is a senior special writer for The Wall Street Journal, Ruth Simon. Ruth, what kind of an impact are these scammers having on small businesses? It's really hard for the businesses. I'd say a couple things. One is that these things keep popping up.
[00:01:45] Lots of times people talk about it being like whack-a-mole. You take down one website and another one pops up. But there are a couple different things that happen. One is that these fake sites are stealing customers who might go to the legitimate site and buy their product.
[00:02:05] They're also, if they deliver nothing at all, which sometimes happens, then you have just unhappy customers. Or worse yet, they deliver a bad product that's cheap, that isn't what customers expect, and it damages the company's reputation.
[00:02:23] Particularly now, we have people who shop online and you're looking at the reviews from what did other people think of this product? Should I buy it? And if a business gets a one or a two-star review because someone purchased a fake, that really hurts sales.
[00:02:41] I talked to one business owner who sells hummingbird feeders, and he found a video he had taken of his wife cleaning the feeder, showing how to do that at their kitchen sink. And suddenly that was showing up attached to these scam websites.
[00:02:59] So what are the businesses that you spoke to doing about these scammers? It's really hard. Some of them have worked with outside firms that monitor for fakes and help them try to get them taken down. The businesses can complain.
[00:03:16] There's a process for going to the platforms to get the fake websites taken down or the fake products. But what the businesses tell me is it's uneven. Sometimes they get action very quickly, sometimes they don't, and it's hard to capture all of it.
[00:03:34] What are the platforms where these small businesses sell like Amazon or Facebook doing to address this? They say that they respond to complaints and that they also act proactively and that they're trying to use some more advanced screening tools to get these products down.
[00:03:54] They're trying to use advances in artificial intelligence and machine learning and things to look out for. But there's also been an explosion of places that you need to monitor if you're a small business. Just as you can sell across the globe, these scammers can sell across the globe.
[00:04:14] One of the businesses that I was speaking with said she found her marketing materials were translated into a bunch of different foreign languages. So one thing is the steps that a platform like Facebook or Amazon are saying that they're taking to police things on their website.
[00:04:34] But there's also just this proliferation of different websites and different places these copycats may emerge. That was Ruth Simon, WSJ's senior special writer. Coming up, Japan wants to make its companies indispensable to the global semiconductor supply chain.
[00:04:51] We'll tell you the steps it's taking to do that after the break. Cyber attackers are using AI and creative ways to compromise users and breach organizations. In a security landscape where you must fight AI with AI, the best AI protection comes from having the best data.
[00:05:15] Zscaler has extended its Zero Trust architecture with powerful AI engines that are trained in tune by 500 trillion daily signals. Learn more about Zscaler Zero Trust plus AI to prevent ransomware and AI attacks. Experience your world secured. Visit zscaler.com slash zero trust AI.
[00:05:41] Japan is a quiet powerhouse in the rarely mentioned corners of the semiconductor supply chain. Chemicals, packaging materials, and tools. But as countries around the world race to make more chips at home, Japan is now feeling its pole position under threat.
[00:05:58] So it's taking steps to make Japanese companies indispensable in the global chip supply chain. Here to talk more about what Japan and its companies are doing is the WSJ's Tokyo Bureau Chief Peter Landers. Peter, we're not talking about chips made by chip makers like Nvidia, Intel, or Samsung.
[00:06:16] We're talking about other essential parts. Give us an idea of what these components are and how they fit into the supply chain. Yes, the supply chain for semiconductors to me seems almost as complicated as the supply
[00:06:28] chain for cars, even though the size of the product is completely different. And you imagine, okay, there's 10,000, 20,000 different parts in a car. It has steel, it has rubber, plastic, all kinds of parts and materials in a car.
[00:06:43] And in a way, the semiconductor supply chain is the same except it's often materials or chemicals used for very specific processes. So one example is a kind of slurry, not the kind that comes from a cement mixer, but that
[00:06:59] is used to polish the surface of wafers used to make semiconductors. And this is a product made by companies like Fujifilm, the camera and filmmaker, and others in Japan. And it's a very specific product for a specific purpose, but without it, you can't make a chip.
[00:07:16] You mentioned Fujifilm. I mean, some of the companies making these components are household names like that, known for something like Camera Film. How did these companies wind up connected to the chip industry? Some of the skills Japanese companies have going back decades or even centuries connect
[00:07:34] to the modern day world of semiconductors. So the process of making a chip is akin to printing a picture on film or creating a photograph on film. A lot of the same principles apply, and that's how a company like Fujifilm initially got into this business.
[00:07:53] And how has that worked out for these companies? How are they doing since making the choice to pivot or maybe add on some kind of essential part for the chipmaking industry? It's become a core business for many of these companies as their original core business declines.
[00:08:08] Obviously, making film for film cameras is not going to be a super profitable or super large business anymore. Also printing magazines and newspapers, another company that makes MSG, monosodium glutamate, has gotten into an aspect of chipmaking.
[00:08:22] And so oftentimes this is the most profitable and fastest growing part of the business for companies that may be a century or more old. Peter, what is the Japanese government doing to support the country's menagerie of obscure suppliers for the chip supply chain?
[00:08:38] It's giving a variety of subsidies. And the biggest example of support was a government investment fund actually acquiring one of the makers of something called photoresist. That's a substance used in chipmaking. There's a company called JSR, originally Japan Synthetic Rubber.
[00:08:55] So it was initially focusing on manufacturing rubber, but again, it shifted its business into this particular kind of semiconductor material. It's a leader in the field. And when the company was up for sale, a government investment fund decided to buy it for about $6 billion.
[00:09:11] And that transaction is being completed this month. So that's one example of support. Also subsidies for building new plants and that kind of thing. Has Japan ever used its position in the chip supply chain to help it in geopolitical negotiations?
[00:09:26] There was an interesting case in 2019 when Japan and South Korea were at loggerheads over historical issues. And South Korean courts were threatening to seize assets from Japanese companies over alleged wartime wrongdoing during the 1940s.
[00:09:44] And Japan claims that all of these types of issues were resolved in a treaty in 1965. And the two countries were really, although neighbors, they're both democracies, they're both allies of the United States.
[00:09:55] And yet at this point in 2019, Japan and South Korea were really at odds with each other and fighting with each other. And so Japan threatened to stop the export of some of these key semiconductor making materials to South Korea.
[00:10:11] Ultimately, they didn't really carry out the threat in full. And then three years later, a much more conciliatory president was elected in South Korea. And now once again, they're friends and they're working together with the United States and they're having summit meetings.
[00:10:26] And when that happened, Japan said, oh, forget that issue with the materials. Of course, you can have the materials as you always did and import them. So it was a card that they almost played and showed that they could play it in a crisis.
[00:10:39] Does Japan's dominance in this area create any risks for the global chip market? There are some materials that are only made in Japan, and that is a risk. Not so much for geopolitical reasons. It's a country with a lot of earthquakes and other natural disasters.
[00:10:53] And so there is a risk when a particular material that may not get a lot of notice during normal times suddenly becomes unavailable because of a fire, earthquake, typhoon, whatever it may be. And you do see Japanese companies pushed by their clients really to diversify their production
[00:11:10] strategies and maybe have a plant in Japan. Yes, but perhaps one in Singapore, one in the U.S., someplace else so that they're not completely dependent on one plant. That was our Tokyo Bureau Chief Peter Landers. And that's it for Tech News Briefing.
[00:11:25] Today's show was produced by Julie Chang with supervising producer Catherine Millsop. I'm Zoe Thomas for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening. Zscaler extended its Zero Trust architecture with powerful AI engines trained by 500 trillion
[00:11:48] daily signals to prevent ransomware and AI attacks that target business. Zscaler Zero Trust plus AI. Learn more at zscaler.com slash zero trust AI.