- Japan’s METI invests JPY 1.23T in semiconductors and AI with long-term funding
- JPY 150B for chips, JPY 387B for AI, plus support for minerals and carbon-neutral projects
- JPY 1.78T in bonds to back Japanese investments abroad, strengthening competitiveness
The Japanese government's new budget plan indicates that the Ministry of Economy, Trade, and Industry (METI) is going to invest around JPY 1.23 trillion (USD 7.9 billion) in the area of semiconductor and AI technology for the fiscal year that will start in April.
This is a huge increase compared to the allocations for previous years and accounts for a 50% hike in METI’s total budget of JPY 3.07 trillion. The draft was approved by Prime Minister Sanae Takaichi's Cabinet, with a parliamentary review process set for later this year.
The budget hike shows Japan's determination to maintain its domestic skill set despite competition between the U.S. and China and the impact of global supply chain troubles.
The significant change in the new budget is that it will not focus on one-time supplementary allocations anymore but rather on stable and recurring funding for semiconductors and AI, which would give companies and research institutions the certainty of long-term investment.
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In the plan, the government's semiconductor project that aims to come up with future chip manufacturing technology gets a sum of JPY 150 billion, thus, totally state investment in the company rising to reach JPY 250 billion.
The amount allocated for AI is JPY 387.3 billion, which is intended for domestic foundational models, data infrastructure, and "physical AI," which means the application of AI in robotics and industrial machines.
Moreover, the budget sets aside JPY 5 billion for the acquisition of critical minerals like rare earth and JPY 122 billion for carbon-neutralizing projects including the development of next-generation nuclear power.
Furthermore, the issuance of special bonds worth JPY 1.78 trillion will bolster Nippon Export and Investment Insurance to back up Japanese corporate investment in the U.S. under bilateral trade agreements.
The enlarged budget is a clear signal of Japan's determination to invest in high-tech industries and to be globally competitive even during complex and difficult to navigate economic and political scenarios.