Direct investments in Japan and operational efficiency of semiconductor companies from Taiwan

This research examines direct investments in Japan by Taiwanese semiconductor companies over the past two decades (2004-2023) and their impact on operational efficiency. We first utilize Data Envelopment Analysis (DEA) to estimate inefficiency scores of semiconductor companies, and then apply truncated regression to assess how investing in Japan affects these bi- as-corrected scores. Our findings indicate that companies investing in Japan generally show higher operational efficiency than non-investors. However, we find no evidence that these in- vesting companies gain extra efficiency from their supply chain activities in Japan.