Japan's $65 Billion Semiconductor Gamble Aims to Narrow Tech Gap and Lead Global Innovation
1min read Japan is embarking on an unparalleled initiative, committing an extraordinary 10 trillion yen (approximately $65 billion) to bolster its semiconductor and AI sectors. This plan represents a pivotal component of the government's broader economic strategy, anticipated for approval by the Cabinet on November 22, 2024. The initiative aims to significantly boost domestic chip production capabilities by underwriting next-generation chip development and mass production efforts.
Japan has already invested around 4 trillion yen towards revitalizing its semiconductor industry over the past three years, including 920 billion yen earmarked specifically for Rapidus Corporation. Rapidus, a cutting-edge chip manufacturing venture backed by industry giants like Toyota and Sony, is strategically positioning itself in areas such as autonomous driving and AI applications. With Japan's latest financial commitment, Rapidus is expected to benefit substantially, addressing its need for an estimated 5 trillion yen to achieve its daring goal of producing 2-nanometer chips, thus closing the technological gap with leaders like Taiwan Semiconductor Manufacturing Co. and Intel.
The government's strategic vision further includes attracting significant foreign investment, exemplified by its robust support of TSMC's factory in Kumamoto Prefecture, with subsidies totaling approximately 476 billion yen. Additionally, future plans to support subsequent phases of TSMC's expansion underscore Japan's commitment to securing a stable domestic chip supply chain.
Ambitiously, Japan aspires to double domestic semiconductor sales by 2030, with a long-term investment target of 12 trillion yen from both public and private sectors over the coming decade. Through these initiatives, Japan seeks not only to ensure a reliable chip supply but also to reestablish itself as a leader in the semiconductor arena by narrowing its technological disparity with global competitors.
The economic significance of this strategic investment is profound, potentially reshaping Japan's semiconductor manufacturing landscape and exerting a considerable impact on the global supply chain. In an era marked by geopolitical tensions and trade uncertainties, Japan's bold move underscores its resolve to carve out a prominent position in the forefront of forthcoming technological advancements and global industrial competition.
This initiative, not reliant on tax increases as confirmed by the Economic Minister, reflects Japan's broader economic ambitions and represents a significant fiscal commitment to advancing its technological infrastructure, ensuring long-term national economic and industrial resilience.