Today, most active in research and development (R & D) activities are high technology industries such as electronics and computers. The semiconductor industry is one representative field. The semiconductor itself was invented in the United States in the late 1950s. Japan began its R & D based on technology imported from the United States. Since then, through fierce competition among firms in technological development and capital investment, this industry rapidly acquired its international competitive capability. Through this process, private firms conducted joint R & D, and the government actively supported and subsidized such private joint R & D activities. Today, Japan's semiconductor industry has reached the highest technological level in the world, and semiconductor products produced by Japanese firms are exported en masse to the world market. In this technological innovation process in the semiconductor industry, one can discern several characteristics common to all innovations in the Japanese economy. This discussion takes up the semiconductor industry as a case study of R & D by Japanese firms and of the government support.