(Dec 26): Japan’s industry ministry is set to nearly quadruple its budgeted support for cutting-edge semiconductors and artificial intelligence development to about ¥1.23 trillion (US$7.9 billion or $10.1 billion) for the fiscal year starting in April.
Overall the Ministry of Economy, Trade and Industry’s budget rose by about 50% from the previous year to ¥3.07 trillion, largely due to the jump in chips and AI spending. After Prime Minister Sanae Takaichi’s cabinet signed off on it Friday, the government’s initial budget plan will be debated in parliament in the new year.
The jump in chips and AI spending comes at a time when Japan is trying to strengthen its capacities in frontier technology, as the US and China race ahead. As the world’s two largest economies continue to remain on tense terms despite a lull in their trade war, Japan is also trying to secure better supply chain access for key technologies.
Starting with the fiscal year beginning in April, the ministry also plans to secure most of the additional funding for chips and AI in regular budgets, instead of through the more ad-hoc approach of funding it through extra budgets later in the year. That’s expected to provide more stable funding to the sectors.
For semiconductors, the ministry has earmarked ¥150 billion for state-backed chip venture Rapidus Corp., bringing the cumulative government investment in the venture to ¥250 billion. For AI, ¥387.3 billion is being marked for the development of domestic foundation AI models, strengthening data infrastructure and “physical AI” where AI controls robots and machinery.
In the broader budget, ¥5 billion is being set aside for securing key minerals including rare earths. For decarbonization, ¥122 billion is earmarked for areas including the development of so-called next-generation nuclear power plants.
See also: Japan’s Takaichi to unveil record ¥122 tril budget for FY2026
Some ¥1.78 trillion of special bonds will also be issued to help state-backed Nippon Export and Investment Insurance support Japanese investment into the US as part of the two countries’ trade agreement.
Uploaded by Magessan Varatharaja
