The Japanese government is betting more on AI chips: the budget for the next fiscal year will nearly triple

The Zhitong Finance App learned that Japan's Ministry of Economy, Trade and Industry plans to nearly triple budget support for cutting-edge semiconductor and artificial intelligence development this fiscal year (starting in April) to about 1.23 trillion yen (7.9 billion US dollars). Japan's Ministry of Economy, Trade and Industry's total budget increased by about 50% from the previous year to 3.07 trillion yen, mainly due to a sharp increase in spending on chips and artificial intelligence. Japanese Prime Minister Sanae Takaichi's cabinet approved the budget on Friday, and the preliminary budget plan will be submitted to the Diet for consideration in the new year.

Spending in the chip and artificial intelligence sector is surging at a time when Japan is trying to improve its strength in cutting-edge technology, while China and the US are competing to develop. Although trade relations between China and the US have eased somewhat, the relationship between the world's two largest economies remains strained, and Japan is also working to ensure a smooth supply chain for key technologies.

Starting with the new fiscal year beginning in April, Japan's Ministry of Economy, Trade and Industry plans to include most of the additional funding in the chip and artificial intelligence sector in the regular budget instead of passing temporary additional budget allocations at the end of the year as before. This move is expected to provide more stable financial support for related fields.

In the semiconductor sector, Japan's Ministry of Economy, Trade and Industry has allocated 150 billion yen for the state-owned chip company Rapidus Corp., bringing the total government investment in this company to 250 billion yen. In the field of artificial intelligence, the Japanese government allocated 387.3 billion yen to develop basic domestic artificial intelligence models, strengthen data infrastructure construction, and develop “physical artificial intelligence” (that is, artificial intelligence controls robots and machines).

In the overall budget, 5 billion yen will be used to guarantee critical mineral resources, including rare earths. To achieve the decarbonization target, 122 billion yen will be used in various fields, including the development of so-called next-generation nuclear power plants. According to the trade agreement between the two countries, Japan will also issue a special bond of about 1.78 trillion yen to help state-supported Japanese export and investment insurance companies to support Japanese investment in the US.