Japan Announces $65 Billion Plan to Support Domestic Chip Industry

On Monday, Japanese Prime Minister Shigeru Ishiba announced a £65 billion initiative to strengthen the country’s chip and artificial intelligence sectors through subsidies and other financial incentives.

The plan, expected to inject at least 10 trillion yen (£65 billion) by fiscal 2030, comes as nations seek to secure their chip supply chains amid global disruptions, including U.S.-China trade tensions.

According to a draft of the plan obtained by the news agency Reuters, Japan’s government intends to submit the proposal, which includes bills supporting the mass production of next-generation chips, to the next parliamentary session. The plan specifically targets the chip foundry venture Rapidus and other suppliers of AI-related chips.

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The draft further suggests the government anticipates an economic impact of approximately 160 trillion yen. Led by experienced industry figures, Rapidus aims to mass-produce advanced chips on Hokkaido from 2027, in collaboration with IBM and the Belgium-based research organisation Imec.

During a press conference on Monday, Ishiba confirmed that the government would not issue deficit-covering bonds to fund the initiative but did not disclose details regarding its financing. Deficit-covering bonds are typically issued to offset revenue shortfalls.

Last year, Japan committed around 2 trillion yen to support its chip industry. The latest initiative, part of a comprehensive economic package expected to receive cabinet approval on 22 November, aims to secure a total investment of 50 trillion yen from both public and private sectors in chip production over the next decade.

Ishiba also noted that the government plans to meet with business and labour union representatives later this month to discuss next year’s annual wage negotiations.