Japan to Spend $65 Billion to Boost Chip and AI Industries

Japan to Spend $65 Billion to Boost Chip and AI IndustriesTokyo, November 12 - Japan's Prime Minister Fumio Kishida announced on Monday a $65 billion plan to bolster the country's chip and artificial intelligence industries through subsidies and other financial incentives. The plan, which would allocate over 10 trillion ($65 billion) in support through fiscal year 2030, aims to counter global supply chain disruptions and strengthen control over chip supply chains

Japan to Spend $65 Billion to Boost Chip and AI Industries

Tokyo, November 12 - Japan's Prime Minister Fumio Kishida announced on Monday a $65 billion plan to bolster the country's chip and artificial intelligence industries through subsidies and other financial incentives. The plan, which would allocate over 10 trillion ($65 billion) in support through fiscal year 2030, aims to counter global supply chain disruptions and strengthen control over chip supply chains.

According to a draft plan seen by media earlier on Monday, the Japanese government intends to submit proposals, including legislation to support the mass production of next-generation chips, at the next parliamentary session. The draft emphasizes support for chip foundry Rapidus and other AI chip suppliers. The government anticipates an estimated economic impact of 160 trillion (about $1 trillion) from the plan.

Rapidus, led by industry veterans, plans to begin mass production of cutting-edge advanced chips in northern Japan's Hokkaido prefecture from 2027 in collaboration with IBM and the Belgium-based research institute Imec. This partnership will help Japan reassert its competitiveness in chip manufacturing and become a vital part of the global chip supply chain.

At a press conference on Monday, Kishida stated that the government would not finance the chip industry support plan through the issuance of deficit bonds. However, he did not disclose specific funding details. Deficit bonds are debt securities issued to cover shortfalls in national revenue.

Notably, last year, the Japanese government had pledged about 2 trillion (approximately $13 billion) to support the chip industry. This initiative is part of the government's comprehensive economic stimulus package, expected to be approved by the Japanese Cabinet on November 22 this year. The plan calls for a total of 50 trillion (approximately $325.4 billion) in public-private investment in the chip sector over the next decade.

Kishida also indicated that the government plans to meet with business and labor union representatives later this month to discuss next year's annual wage negotiations. Sustained wage growth has been a focus of the Japanese government, as rising living costs are impacting household spending, potentially dampening consumer growth and overall economic development.

This plan demonstrates the Japanese government's strong commitment to developing the chip and AI industries and reflects a strategic shift in response to the evolving global technology competition landscape. As chip technology continues to evolve and AI applications deepen, the Japanese government hopes to secure a more substantial position in future technological advancements through active support.