Japan’s Ruling Party Eyes $6.5 Billion a Year for Chips, AI

(Bloomberg) — Japan’s ruling party aims to secure roughly ¥1 trillion ($6.5 billion) per year to keep supporting the nation’s semiconductor and artificial intelligence sectors, according to a lawmaker who leads such efforts.

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Most of the funding will be secured in a regular budget for the year starting in April rather than in an extra budget for the current fiscal year, according to Yoshihiro Seki, secretary general of the Liberal Democratic Party’s group of lawmakers that supports chip making in Japan.

That will be a change in funding method from the past few years, when the government relied on supplementary budgets to fund its chip revival strategy. The shift is expected to make it easier for the government to secure funding in a stable manner, according to Seki, who spoke to reporters on Thursday after the LDP group met.

Japan has set aside roughly ¥5.7 trillion to support Japan’s semiconductor and AI sectors since 2021, when it created a new strategy to revive domestic chip making, according to the Ministry of Economy, Trade and Industry. Most of the funding has come from extra budgets rather than from regular ones.

“Since we were uncertain whether this approach would succeed, we had been moving ahead only with extra budgets,” Seki said. “But from now on, METI’s share in the regular budget will really jump up. So the idea is that allocations from supplementary budgets will fall, leading to more stable operations.”

In last year’s supplementary budget, about ¥1.5 trillion was earmarked for the efforts, as the first round of funding for former Prime Minister Shigeru Ishiba’s pledge to provide more than ¥10 trillion of fresh public support for the sectors. The ¥1 trillion that the LDP aims to secure will be part of the ¥10 trillion pledge, too, according to Seki.

Of the total funding earmarked, roughly ¥1.7 trillion has been allocated to Rapidus Corp., which aims to mass produce cutting-edge chips by 2027. Micron Technology Inc.’s Hiroshima factory has been awarded ¥774.5 billion.

The overwhelming majority of the world’s advanced artificial intelligence chips are manufactured by Taiwan Semiconductor Manufacturing Co., sparking fears about reliance on an island that China claims as its own.

(Updates with comments from Seki, more details.)