Japan: Billion-euro plan to support the domestic chip industry

Japan's Prime Minister Shigeru Ishiba presented a multi-billion plan on Monday to promote the country's chip industry and the development of artificial intelligence (AI) through subsidies and other financial incentives. The plan envisages subsidies of at least 10 trillion yen (61 billion euros) by 2030. This was reported by the Reuters news agency. Ishiba did not provide details on the financing of the plan.

In view of increasing trade disputes between the United States and China and geopolitical tensions around Taiwan, many countries are trying to realign and better control their chip supply chains. The Japanese government's plan includes legislation to support the mass production of next-generation chips. It is primarily aimed at Rapidus, a state-supported group of companies for Japan's semiconductor production, in which groups such as Kioxia (formerly Toshiba), NEC, Sony and Toyota are involved. Rapidus was launched two years ago and, with the support of the United States, is set to mass-produce its own 2-nanometer processors by 2030. According to Reuters, Rapidus will mass-produce state-of-the-art chips on the northern island of Hokkaido from 2027 in collaboration with the US company IBM and Imec, a research center for nano- and microelectronics headquartered in Belgium.

The plan is part of a comprehensive economic package by the Japanese government, which is to be approved by the cabinet on November 22. According to Reuters, which was able to view a draft, it envisages total public and private sector investment of at least 50 trillion (305 billion euros) over the next ten years. In the 1990s, Japan was still one of the largest producers of semiconductors, but since the turn of the millennium it has slipped just like Europe. According to market analyses, Japan is one of the largest producer nations for semiconductors with a 20 percent share of global chip production, but these are primarily old technologies with structures in the two-digit nanometer range. Now the country wants to return to the top group of chip producers.

The USA and Europe are also promoting semiconductor production

Other countries and regions are also pursuing ambitious goals. In the United States, semiconductor production has become a national security issue in recent years. Chips are now found in virtually every modern electronic device – from telephones, refrigerators and computers to state-of-the-art weapons systems. However, the USA has also fallen behind China in chip production in recent years. This is fueling concerns in Washington about the national supply chain for semiconductors.

The US government has therefore launched a subsidy offensive. The trade war with China and the conflict over Taiwan have highlighted the risks of excessive dependence on foreign supply chains. With the Chips and Science Act, the US has therefore launched a multi-billion dollar subsidy program to boost US semiconductor production, from which the Pentagon is also benefiting.

The European Union and Germany are also trying to counter the strong dependence on semiconductors with a push to expand local chip production. The new European Chips Act, for example, is intended to attract more state-of-the-art semiconductor production. In order to become less dependent on the USA and China in the development of microelectronics and chips, the EU has approved a billion-euro aid program.

(akn)