Japanese Prime Minister Shigeru Ishiba has pledged more than $65 billion in new support for the country’s semiconductor and artificial intelligence sectors, as Tokyo looks to keep up with global spending on advanced technology.
Ishiba said he hoped that government support of more than ¥10 trillion ($65 billion) for the sector by the 2030 budget year would serve as a catalyst to generate public and private investments of more than ¥50 trillion over the next decade.
The new financing framework, separate from previously earmarked funds worth about 4 trillion yen, is expected to be part of an upcoming economic stimulus package that will help Tokyo narrow the gap with global powers in chip support.
The U.S. and its allies are racing to outpace China in artificial intelligence powering semiconductor capabilities, an area that policymakers now see as essential to economic security.
President Joe Biden’s Chips and Science Act of 2022 promises a total of $39 billion in subsidies for chipmakers, as well as loans and guarantees worth another $75 billion plus tax breaks of up to 25%.
However, the amount of money Beijing is pouring into the sector is likely to be dwarfed by US spending. China, which estimates lead the world in the number of chip factories under construction, has beefed up the so-called Big Fund to oversee state investments in companies such as local chipmakers Semiconductor Manufacturing International Corp. and Huawei Technologies Co.
Read more: Global Chips Battle Intensifies with $81 Billion Subsidy Increase
At a press conference after winning a vote in parliament to remain prime minister, Ishiba said he wanted to spread positive examples of regional revitalization, such as TSMC’s chip factory in Kumamoto, across the country.
The Prime Minister said he would discuss the financing of the plans with the various ministries, but that he would not pay for the measures through deficit financing bonds. The government will also not raise taxes to finance the new framework, Japanese Industry Minister Yoji Muto said, adding that details were still being worked out.
Previous local media reports suggested the government was looking for a new way to finance Japan’s semiconductor sector. Ishiba’s government plans to issue bonds backed by assets it owns, including NTT shares, to provide subsidies to semiconductor companies, the Nikkei newspaper reported on November 1.
Japan has allocated about ¥4 trillion in previous extra budgets to revive its chip sector, including ¥920 billion for Rapidus Corp. in Hokkaido. Rapidus aims to produce advanced logic chips at scale by 2027.
The new framework will be separate from the ¥4 trillion, Muto said.
“Chips are not limited to Rapidus,” Muto said. “The process is about thinking about how we will approach the next-generation semiconductor market from now on.”
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