TLDR:
- Japan allocates ¥1.5 trillion ($9.9 billion) for chip and AI development in extra budget
- ¥1.05 trillion earmarked for next-gen chips and quantum computing research
- ¥471.4 billion designated for domestic advanced chip production support
- Part of PM Ishiba’s larger ¥10 trillion pledge for chips and AI by 2030
- Previous investments include support for TSMC, Micron, and Rapidus facilities
Japan allocated an additional ¥1.5 trillion ($9.9 billion) toward semiconductor and artificial intelligence development through its supplementary budget for the fiscal year ending March 2025.
The fresh funding package divides into two main components: ¥1.05 trillion dedicated to research and development in next-generation chips and quantum computing, and ¥471.4 billion earmarked to boost domestic advanced chip production. This move represents Japan’s latest push to strengthen its position in the increasingly competitive global tech landscape.
This new investment is part of a broader commitment from Prime Minister Shigeru Ishiba’s administration, which has pledged more than ¥10 trillion in support for chips and AI development through fiscal year 2030. The supplementary budget, approved by Japan’s cabinet, is expected to receive parliamentary approval before the year ends.
The funding boost comes at a time when Japan is working to maintain its technological edge amid intense global competition, particularly from China and the United States. Japanese policymakers have repeatedly emphasized the crucial role of semiconductor technology in developing advanced artificial intelligence systems and maintaining national security.
Over the past three years, Japan has demonstrated its commitment to rebuilding its semiconductor industry by allocating approximately ¥4 trillion in chip-related support. This includes major investments in international partnerships, such as support for Taiwan Semiconductor Manufacturing Co.’s factory in Kumamoto and Micron Technology’s expansion of its Hiroshima facility for advanced DRAM production.
A key beneficiary of Japan’s semiconductor push has been Rapidus Corp., the domestic chipmaker that has received about ¥920 billion for its Hokkaido factory development. Rapidus, which aims to begin mass production in 2027, represents Japan’s ambitious attempt to build leading-edge chipmaking capabilities from the ground up.
The Ministry of Economy, Trade and Industry (METI) has also taken steps to strengthen Japan’s high-tech supply chain. Using funds from last year’s extra budget, METI approved ¥101.7 billion in subsidies for various projects aimed at reinforcing the country’s fragmented technology infrastructure.
Among these initiatives is a joint venture between Denso Corp. and Fuji Electric Co., which received approval for up to ¥70.5 billion in subsidies. This partnership plans to invest ¥212 billion to increase production of silicon carbide wafers and power chips, essential components for electric vehicles.
Japan’s strategic focus on semiconductor development extends beyond pure computing applications. The country has previously supported collaborations between major industrial players, including Toshiba Corp. and Rohm Co., for the production of power semiconductors.
The investment strategy reflects Japan’s recognition of semiconductors as a critical component of economic security. This perspective has been repeatedly emphasized by Prime Minister Ishiba and his cabinet members, who view domestic semiconductor production as essential for Japan’s future economic stability.
Japan’s position in the global semiconductor industry is unique, as it is home to some of the world’s leading semiconductor materials and equipment manufacturers. This new funding aims to leverage these existing strengths while developing new capabilities in emerging technologies.
The quantum computing aspect of the investment represents Japan’s forward-looking approach to maintaining technological competitiveness. By including quantum research in this funding package, Japan demonstrates its commitment to developing next-generation computing capabilities.
This latest funding initiative builds upon Japan’s existing semiconductor ecosystem, which includes both domestic companies and international partnerships. The strategy combines support for established players with investments in new ventures like Rapidus.
The allocation of these funds will be overseen by METI, though specific details about fund distribution, particularly regarding Rapidus, remain under consideration. This careful approach to fund allocation suggests a strategic focus on maximizing the impact of these investments.
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