Japanese Prime Minister Shigeru Ishiba announced on Monday a bold $65 billion plan to bolster the country’s semiconductor and artificial intelligence (AI) sectors.

The plan, set to provide over 10 trillion yen in financial support by fiscal 2030, aims to enhance Japan's position in global chip supply chains, which have been disrupted by trade tensions and other global challenges, including the U.S.-China trade war.

The government’s strategy includes subsidies and other financial incentives to support the mass production of next-generation chips. A draft of the plan, seen by Reuters, targets key players such as the chip foundry venture Rapidus, which is focused on producing cutting-edge chips for AI and other high-tech applications.

The economic impact of the initiative is expected to reach approximately 160 trillion yen, according to the draft. Rapidus, a venture led by industry experts, plans to begin mass production of advanced chips in Hokkaido by 2027, in collaboration with IBM and Belgium’s Imec.

Prime Minister Ishiba clarified that the government would not resort to issuing deficit-covering bonds to fund the initiative, although he did not disclose specific details on how the plan would be financed. Last year, Japan allocated 2 trillion yen to support its chip industry, and the new plan is part of a broader economic package set to be approved by the cabinet on November 22.

The government also aims to stimulate 50 trillion yen in public and private sector investment over the next decade to expand Japan’s semiconductor industry. As part of the broader economic agenda, Ishiba announced plans to engage with business and labor union representatives later this month to discuss next year’s annual wage negotiations, as sustaining wage growth has become a priority in light of rising living costs affecting households and consumption. (ILKHA)