Japan to boost spending on semiconductors and AI
Regular budgets will now fund most AI and chip spending, replacing ad-hoc allocations and providing greater stability for long-term technological development.
Japan’s Ministry of Economy, Trade and Industry is set to significantly increase funding for advanced semiconductors and AI in the coming fiscal year.
Spending on chips and AI is expected to nearly quadruple to ¥1.23 trillion ($7.9 billion), accounting for the majority of the ministry’s ¥3.07 trillion budget, a 50% increase from last year. The budget, approved by Prime Minister Sanae Takaichi’s Cabinet, will be debated in parliament early next year.
The funding boost reflects Japan’s push to strengthen its position in frontier technologies amid global competition with the US and China. The government will fund most of the additional support through regular budgets, ensuring more stable backing for semiconductor and AI development.
Key initiatives include ¥150 billion for chip venture Rapidus and ¥387.3 billion for domestic foundation AI models, data infrastructure, and ‘physical AI’ for robotics and machinery control.
The budget also allocates ¥5 billion for critical minerals and ¥122 billion for decarbonisation, including next-generation nuclear power. Special bonds worth ¥1.78 trillion will also support Japanese investment in the US, reinforcing the trade agreement between the two countries.
The increase in funding demonstrates Japan’s strategic focus on achieving technological self-sufficiency and enhancing global competitiveness in emerging industries, thereby ensuring long-term support for innovation and critical infrastructure.
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