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Japan pledges fresh US$65 billion for chips, AI to help narrow gap with China

The US and its allies are racing to keep ahead of China in AI-powering semiconductor capabilities, seen as essential to economic security

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A Japanese 10,000 yen banknote. Japan’s prime minister said he hoped the public aid would generate public and private investment of more than 50 trillion yen over the next 10 years. Photo: Reuters
Japanese Prime Minister Shigeru Ishiba pledged more than US$65 billion of fresh support for the nation’s semiconductor and artificial intelligence sector as Tokyo looks to keep up with a global spending spree on cutting-edge tech.
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Ishiba said he hoped public aid of more than 10 trillion yen (US$65 billion) for the sector by the 2030 financial year would serve as a catalyst to generate public and private investment of more than 50 trillion yen over the next 10 years.

The new funding framework, separate from previously earmarked funds worth roughly 4 trillion yen, will be sketched out in an coming economic stimulus package with an aim to generate an economic impact of about 160 trillion yen, according to a draft of the package seen by reporters.

The additional funding will help Tokyo narrow the gap with global powers on chip support. The US and its allies are racing to keep ahead of China in AI-powering semiconductor capabilities, a domain that policymakers now see as essential for economic security.

China leads the world in the number of semiconductor plants under construction. Photo: Reuters
China leads the world in the number of semiconductor plants under construction. Photo: Reuters
US President Joe Biden’s 2022 Chips and Science Act promises a total of US$39 billion in grants for chipmakers as well as loans and guarantees worth an additional US$75 billion plus tax credits of up to 25 per cent.
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Beijing is likely pouring much more into its chips sector. China, which leads the world in the number of chip plants under construction, has been bolstering what’s known as the Big Fund to oversee state investments in companies such as local chipmaking champions Semiconductor Manufacturing International Corp. and Huawei Technologies Co.

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