Japan to Boost Funds for Declining Semiconductor Chip Manufacturing

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Part of the allocated funds in this fiscal year’s additional budget are expected to aid TSMC.

Japan’s government plans to set aside approximately 2 trillion yen ($13 billion) to bolster its semiconductor industry. This move is a part of the nation’s strategy to regain its former prominence in this crucial field. 

Historically a leader in providing chip making equipment and materials, Japan has seen a decline in its manufacturing capabilities over recent years. Now, the government is offering subsidies to encourage chipmakers to expand their operations.

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A portion of these funds, allocated through an additional budget for the current fiscal year, is expected to support the Taiwanese semiconductor company TSMC and the chip foundry venture Rapidus, which aims to produce advanced chips in Hokkaido.

TSMC
Image Source – Taiwan Semiconductor Manufacturing Company

This funding for the chip sector is a component of Prime Minister Fumio Kishida’s larger plan involving 13.1 trillion yen in spending, as outlined in the 2023/24 supplementary budget approved by his government on Friday. To finance these expenditures, Japan is likely to issue nearly 9 trillion yen ($59.8 billion) in bonds, a decision that has raised some concerns about the nation’s increasing debt.

Taiwan Semiconductor Manufacturing Company Limited (TSMC) was the world’s first dedicated semiconductor foundry and has long been the leading company in its field. As of 2020, TSMC’s global production capacity reaches around thirteen million 300 mm-equivalent wafers annually, manufacturing chips for various clients using process nodes ranging from 2 microns to 5 nanometers.

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