Japan eyes ¥2 trillion for chips and AI in economic package

Japan's planned comprehensive economic package will feature ¥2 trillion in aid to promote investments in the fields of semiconductors and artificial intelligence.

In the package, to be compiled this month, the government will show its commitment to large-scale strategic support spanning several years in both areas, bearing in mind Rapidus, which has advanced into the Hokkaido region to mass-produce next-generation chips.

The government also plans to resume the program to reduce electricity and gas bills that ended in October, it was learned Friday. Details such as when to resume will be decided later.

It is considering extending the gasoline subsidies scheduled to expire at year-end. Also planned are cash benefits for low-income households, aid for small and midsize companies and support for the reconstruction of the Noto Peninsula in central Japan, hit hard by a big earthquake in January and heavy rain in September.

Many major economies around the world, including Japan, are beefing up their domestic semiconductor production amid U.S.-China trade rows.

The government has provided the chip industry with ¥3.9 trillion in aid over the past three years, drawing up a supplementary budget each year.

From now on, the government will set medium-term plans for strategic assistance focusing on priority areas. Specifically, it will support investments by Rapidus, development of AI foundation models and improvements in computational resources for AI learning.

To fund such medium-term support measures, the government plans to issue new bridging bonds using government-held shares. Bond redemption will be funded with dividends from the government's holdings of shares in such companies as Nippon Telegraph and Telephone Corp. and Japan Tobacco.

The government will also provide upfront investment support, including for new projects of other semiconductor companies. Such aid is expected to be phased out and replaced by investments and loans from the private sector, but the government will continue its support until the projects are established.