Japan to spend $13B to boost domestic chip production

TOKYO: Japan’s government said on Friday that it plans to spend 2 trillion yen ($13 billion) to boost domestic production of strategically important semiconductors and generative AI technology.

The planned outlays will include 700 billion yen ($4.6 billion) to support the construction of a Taiwan Semiconductor Manufacturing Co. (TSMC) plant in Kumamoto, the firm’s second plant in the southern Japanese region, trade ministry official Motoki Kurita told Agence France-Presse (AFP).

TSMC controls more than half of the world’s output of microchips, which are used in everything from smartphones to cars and missiles.

Kurita said the government will also spend 650 billion yen ($4.3 billion) to support Japanese startup Rapidus, which aims to develop next-generation microchips.

Prime Minister Fumio Kishida’s Cabinet approved the draft supplementary budget for the chip- and AI-related subsidies on Friday as part of a more than $100-billion stimulus package he announced last week.

The extra budget plan for this fiscal year will now be submitted to parliament for approval.

The move comes as pandemic disruptions and tensions with China have raised concerns globally about the risks to existing chip supply chains.

France, Israel and the United States have also looked to incentivize chip-making at home or to take greater control of production.

Japan’s competitiveness as a producer of cutting-edge semiconductors and related products has waned in recent years, and Kishida’s government has sought to boost production of the vital technologies.

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