(Bloomberg) — Japanese Prime Minister Shigeru Ishiba pledged more than $65 billion of fresh support for the nation’s semiconductor and artificial intelligence sector as Tokyo looks to keep up with a global spending spree on cutting-edge tech.
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Ishiba said he hoped public aid of more than ¥10 trillion ($65 billion) for the sector by fiscal 2030 would serve as a catalyst to generate public and private investment of more than ¥50 trillion over the next 10 years.
The new funding framework, separate from previously earmarked funds worth roughly ¥4 trillion, is expected to be part of an upcoming economic stimulus package that will help Tokyo narrow the gap with global powers on chip support.
The US and its allies are racing to keep ahead of China in artificial intelligence-powering semiconductor capabilities, a domain that policymakers now see as essential for economic security.
President Joe Biden’s 2022 Chips and Science Act promises a total of $39 billion in grants for chipmakers as well as loans and guarantees worth an additional $75 billion plus tax credits of up to 25%.
The amount of money that Beijing is pouring into the sector likely dwarfs US spending, however. China, which leads the world in the number of chip plants under construction, according to estimates, has been beefing up what’s known as the Big Fund to oversee state investments in companies such as local chipmaking champions Semiconductor Manufacturing International Corp. and Huawei Technologies Co.
Speaking at a press briefing after winning a vote in parliament to stay on as premier, Ishiba said he wanted to spread positive examples of regional revitalization like TSMC’s chip plant in Kumamoto across the nation.
The prime minister said he would discuss the funding of the plans with the various ministries, but he wouldn’t pay for the measures through deficit-financing bonds. The government won’t raise taxes to fund the new framework, either, Japan’s Industry Minister Yoji Muto said, adding that details are still being hammered out.
Earlier local media reports suggested the government was looking for a new way of providing funding for Japan’s semiconductor sector. Ishiba’s government is planning to issue bonds backed by assets it holds, including NTT shares, to provide subsidies to semiconductor companies, the Nikkei newspaper reported on Nov. 1.
