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(Bloomberg) — Japanese Prime Minister Shigeru Ishiba pledged more than $65 billion of fresh support for the nation’s semiconductor and artificial intelligence sector as Tokyo looks to keep up with a global spending spree on cutting-edge tech.
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Ishiba said he hoped public aid of more than ¥10 trillion ($65 billion) for the sector by fiscal 2030 would serve as a catalyst to generate public and private investment of more than ¥50 trillion over the next 10 years.
The new funding framework, separate from previously earmarked funds worth roughly ¥4 trillion, will be sketched out in an upcoming economic stimulus package with an aim to generate an economic impact of about ¥160 trillion, according to a draft of the package seen by Bloomberg.
The additional funding will help Tokyo narrow the gap with global powers on chip support. The US and its allies are racing to keep ahead of China in artificial intelligence-powering semiconductor capabilities, a domain that policymakers now see as essential for economic security.
President Joe Biden’s 2022 Chips and Science Act promises a total of $39 billion in grants for chipmakers as well as loans and guarantees worth an additional $75 billion plus tax credits of up to 25%.
Beijing is likely pouring much more into its chip sector. China, which leads the world in the number of chip plants under construction, has been beefing up what’s known as the Big Fund to oversee state investments in companies such as local chipmaking champions Semiconductor Manufacturing International Corp. and Huawei Technologies Co.
Tokyo’s ramping up of support for the sector is also based on the need to fuel economic growth at the national and regional levels. Speaking at a press briefing Monday after winning a vote in parliament to stay on as premier, Ishiba said he wanted to spread positive examples of regional revitalization like TSMC’s chip plant in Kumamoto across the nation.
Global chip demand is expected to triple to ¥150 trillion over the next 10 years, and the framework aims to provide public aid of more than ¥10 trillion via methods including, outsourcing, financial support and legislative measures to boost predictability for private companies, according to the draft.
A previous goal of reaching ¥10 trillion in chip-sector investment set by former Prime Minister Fumio Kishida relied on private sector support in addition to public money. Under Kishida, Japan already earmarked about ¥4 trillion in extra budgets to revive its chip sector, including ¥920 billion for Rapidus Corp. in Hokkaido. Rapidus aims to mass produce advanced logic chips by 2027.