Japan unveils 65bn dollars plan to aid domestic chip industry

Tokyo (Reuters: Japanese Prime Minister Shigeru Ishiba on Monday unveiled a $65 billion plan to boost the country's chip and artificial intelligence industries via subsidies and other financial incentives.

The plan, which will provide support worth 10 trillion yen ($65 billion) or more by fiscal 2030, comes as countries look to strengthen control over their chip supply chains after global shocks including trade tensions between the United States and China.

Japan's government intends to submit the plan, including bills to support the mass production of next-generation chips, to the next parliament session, according to a draft of the plan seen by Reuters earlier on Monday.

It specifically targets chip foundry venture Rapidus and other suppliers of chips for artificial intelligence, the draft showed.

The government expects the economic impact to total around 160 trillion yen, according to the draft.

Rapidus is headed by industry veterans and is targeting mass production of cutting-edge chips on the northern island of Hokkaido from 2027 in partnership with IBM and Belgium-based research organisation Imec.

In Monday's news conference, Ishiba said the government would not issue deficit-covering bonds to fund the plan to support the chip industry. He did not reveal details on how it would be financed.

A deficit-covering bond is a type of bond that is issued to make up for a state revenue shortfall.

Last year, the Japanese government said it would allocate some 2 trillion yen to support its chip industry.

The latest plan, part of the government's comprehensive economic package to be approved by cabinet on Nov. 22, will call for a total of 50 trillion yen public and private sectors investment in chips over the next 10 years.

Ishiba said the government planned to meet with business and labour union representatives later this month to discuss next year's annual wage negotiations.

Achieving sustained wage increases has been a priority for the government as rising living costs hit households, potentially weighing on consumption and the broader economy.