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Japan's Government Plans Boost for Domestic Chipmaking Industry
The administration of Prime Minister Fumio Kishida is set to introduce new legislation aimed at enhancing investment in Japan's semiconductor manufacturing capabilities. This initiative reflects a broader strategy to bolster the country's position within the global tech industry, particularly in the sectors of artificial intelligence and next-generation chip production.
Strategic Investments and Legislative Support
During a recent visit to Rapidus Corp.’s foundry in Chitose, Hokkaido, Kishida emphasized the necessity for ongoing and expanded domestic investment in AI and semiconductors. He announced plans to submit a bill to the Japanese Diet that would provide significant government financing to support research, development, and mass production of cutting-edge chips over multiple years. This bill is expected to be presented “as soon as possible.”
The proposed legislation aims to offer comprehensive and systematic support to key sectors, ensuring Japan can keep pace with technological advancements globally. Among the measures under consideration are public guarantees on loans to the semiconductor sector, demonstrating the government's commitment to fostering a competitive chip supply chain within the country.
Public Investment and Economic Competitiveness
Japan has committed approximately ¥4 trillion ($26 billion) over the past three years to revitalize its semiconductor industry and encourage digital transformation. Out of this budget, up to ¥920 billion is designated for Rapidus Corp’s endeavors to produce state-of-the-art 2-nanometer chips, which are customized for specific customer needs. These chips are intended to rival those produced by global giants like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co.
Despite being a leading manufacturer of chip equipment and materials, Japan has lagged in the high-margin markets of memory and logic chip design and manufacturing. This new legislative push is part of a strategic effort to reclaim lost ground and stimulate local innovation and production.
The Role of Energy in Semiconductor Production
Kishida also highlighted the importance of establishing a consistent supply of affordable and clean energy to enable full-scale production at facilities like Rapidus. The reliance on decarbonized energy sources will be crucial in meeting the environmental and economic standards necessary for sustained growth in the semiconductor sector.
Global Context and Competitive Landscape
The escalating rivalry between major powers like the US and China is driving nations worldwide to boost their own semiconductor production capabilities. These chips are essential not only for everyday consumer electronics but also for critical infrastructure, including automobiles, power plants, and defense systems.
The US has recently allocated substantial financial support to its chipmakers, reflecting this global trend. In response, Japan's upcoming legislation and financial commitments are aimed at ensuring the nation remains competitive in this strategic and rapidly evolving industry.
As Japan moves forward with these plans, the legislative and financial framework set in place will be pivotal in determining the country’s future role in the global semiconductor market.
