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Japan to spend USD13B to boost chip production

TOKYO (AFP) – Japan’s government said yesterday that it plans to spend JPY2 trillion (USD13 billion) to boost domestic production of strategically important semiconductors and generative artificial intelligence (AI) technology.

The planned outlays will include JPY700 billion (USD4.6 billion) to support the construction of a Taiwan Semiconductor Manufacturing Company (TSMC) plant in Kumamoto, the firm’s second plant in the southern Japanese region, trade ministry official Motoki Kurita told AFP.

TSMC controls more than half of the world’s output of microchips, which are used in everything from smartphones to cars and missiles.

Kurita said the government will also spend JPY650 billion (USD4.3 billion) to support Japanese startup Rapidus, which aims to develop next-generation microchips.

Prime Minister Fumio Kishida’s cabinet approved the draft supplementary budget for the chip- and AI-related subsidies on Friday as part of a more than USD100 billion stimulus package he announced last week.

The extra budget plan for this fiscal year will now be submitted to parliament for approval.

The move comes as pandemic disruptions and tensions with China have raised concerns globally about the risks to existing chip supply chains.

France and the United States have also looked to incentivise chip-making at home or to take greater control of production.