Japan launches USD 65bn Plan to aid domestic chip industry

Japanese Prime Minister Shigeru Ishiba announced a $65 billion initiative aimed at enhancing the nation's chip and artificial intelligence sectors through subsidies and various financial incentives. This strategy, set to deliver support exceeding 10 trillion yen ($65 billion) by fiscal 2030, arises as nations seek to reinforce oversight of their chip supply chains following global disruptions, such as trade conflicts between the United States and China.

The Japanese government aims to present the plan, which consists of proposals for facilitating the large-scale production of next-generation chips, in the upcoming parliamentary session. The draft indicated that it specifically focuses on chip foundry venture Rapidus and other providers of chips for artificial intelligence.

The draft indicates that the government anticipates the economic impact to reach approximately 160 trillion yen. Rapidus is led by experienced professionals and aims to begin mass production of advanced chips on the northern island of Hokkaido starting in 2027, collaborating with IBM and the Belgium-based research entity Imec.

In the news conference on Monday, Ishiba stated that the government will not release deficit-covering bonds to finance the initiative supporting the chip industry. He did not disclose specifics on how it would be funded. A deficit-covering bond is a bond issued to compensate for a lack of state revenue. Last year, the Japanese government announced it would dedicate approximately 2 trillion yen to bolster its semiconductor industry.