The country is also seeking to ensure better access to supply chains for key technologies.
[TOKYO] Japan's Ministry of Industry plans to quadruple its support budget for cutting-edge semiconductor and artificial intelligence (AI) development to about 1.2 trillion yen (S$9.9 billion) in the financial year starting in April.
Overall, the Ministry of Economy, Trade and Industry's budget increased by about 50% from a year ago to 3.1 trillion yen, largely due to a surge in spending on chips and AI. The government's initial budget bill will be debated in the Diet in the new year, following Prime Minister Sanae Takaichi's cabinet decision on Friday.
The surge in spending on chips and AI comes as Japan looks to shore up its frontier technology capabilities as the United States and China scramble to stay ahead. Japan is also seeking to secure better access to supply chains for key technologies, as tensions between the world's two largest economies continue despite a lull in the trade war.
The department also plans to secure most of the additional funding for chips and AI from the regular budget starting in the fiscal year starting in April, rather than a more ad hoc approach of funding it through supplemental appropriations later in the year. This is expected to provide more stable funding to each sector.
Regarding semiconductors, the ministry allocated 150 billion yen to the state-backed semiconductor venture “Rapidus'', bringing the total government investment in this venture to 250 billion yen. For AI, 387.3 billion yen will be earmarked for the development of domestically-based AI models, strengthening of data infrastructure, and “physical AI” in which AI controls robots and machines.
The broader budget includes 5 billion yen for securing key minerals, including rare earths. For decarbonization, 122 billion yen will be earmarked for development of so-called next-generation nuclear power plants.
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As part of the bilateral trade agreement, about 1.8 trillion yen in special bonds will also be issued by government-backed Nippon Export and Investment Insurance to support Japanese investment in the United States. bloomberg
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