Japan’s Ministry of Economy, Trade and Industry will increase its support for semiconductors and artificial intelligence (AI) sector to approximately Y1.23tn ($7.9bn) for the fiscal year beginning in April.
This figure represents nearly four times last year’s allocation for these sectors and constitutes the primary reason for an overall 50% rise in the ministry’s annual budget to Y3.07tn.
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The initial budget proposal, approved by Prime Minister Sanae Takaichi’s Cabinet on 26 December, awaits debate in Parliament early next year.
The significant increase in funding comes as Japan seeks to enhance its capabilities in advanced technologies amid ongoing competition between the US and China and efforts to secure stable supply chains for essential technologies.
From the new fiscal year, most of the additional chips and AI funding will be incorporated into regular budgets rather than being reliant on supplementary allocations later in the year, providing more predictable financial resources to these industries.
The ministry has allocated Y150bn specifically for Rapidus, a government-backed semiconductor venture, raising total state investment in Rapidus to Y250bn.
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By GlobalDataIn the area of AI, Y387.3bn will go towards developing domestic foundational models, improving data infrastructure and supporting projects where AI operates robotics and machinery.
In addition to technology spending, Y5bn has been earmarked for securing key minerals such as rare earths, while Y122bn are designated for initiatives including next-generation nuclear power plant development.
Furthermore, the finance plan includes issuing Y1.78tn in special bonds to support Nippon Export and Investment Insurance backing Japanese investments in the US under a bilateral trade agreement.
