Japan Launches $65 Billion Boost for Domestic Chip Industry

On November 11, Japanese Prime Minister Shigeru Ishiba announced a $65 billion initiative to strengthen Japan’s chip and artificial intelligence (AI) industries through subsidies and financial incentives, as reported by Reuters.

 

Purpose of the Initiative

The plan, valued at over 10 trillion yen ($65 billion) through fiscal 2030, aims to bolster Japan’s control over its semiconductor supply chain amidst global disruptions, including ongoing trade tensions between the U.S. and China, according to the report.

Japan’s government will introduce the proposal, including new legislation to support next-generation chip production, in the upcoming parliamentary session, based on a draft obtained by Reuters. The initiative primarily targets chip foundry venture Rapidus and AI chip suppliers, with the government projecting an economic impact of approximately 160 trillion yen.

Led by experienced industry figures, Rapidus plans to begin large-scale production of advanced chips in Hokkaido by 2027, working in collaboration with IBM and the Belgian research organization Imec.

During a press conference on Monday, Ishiba stated that deficit-covering bonds would not be issued to fund this semiconductor support plan but did not specify alternative funding sources. Deficit-covering bonds are generally issued to cover revenue shortfalls.

Last year, Japan allocated 2 trillion yen to support its semiconductor sector. This new plan, part of a broader economic package set for cabinet approval on November 22, seeks to attract a total of 50 trillion yen in public and private investments in the chip industry over the next decade.

Ishiba also noted that government discussions with business leaders and labor unions will take place later this month to address next year’s wage negotiations. Increasing wages remains a priority as Japan faces rising living costs, which could affect consumer spending and economic growth.

These developments will be closely monitored by market participants and global investors, as they are likely to influence investment decisions in Japan’s domestic chip industry.