Tokyo, November 20, 2024 – Japan plans to invest $65 billion in microchips and artificial intelligence to reclaim its status as a global technology leader and address challenges posed by an aging population.
The package, amounting to 10 trillion yen, is expected to be approved this week as a response to rising concerns about a potential Chinese invasion of Taiwan, the world's largest chip producer.
Analysts caution that questions remain regarding labor shortages and Japan's ability to generate sufficient energy for AI data centers.
Kelly Forbes, president of the AI Asia Pacific Institute, noted, “Japan is waking up to the potential of these developments,” referencing the country's previous inaction in the field of AI.
Last week, Japanese tech investor SoftBank and U.S. giant Nvidia unveiled ambitious plans to establish a nationwide AI network.
Earlier this year, significant American investments included Microsoft, a partner of OpenAI, the creator of ChatGPT. AI automation may help Japan, which has the second oldest population globally, boost productivity.
The new government funds will support Japan's Rapidus project for next-generation semiconductor production. Tokyo has already pledged up to 4 trillion yen in subsidies to triple domestic chip sales by 2030.
While most chips are produced in Taiwan, concerns about a blockade or invasion by Beijing are increasing.
In response to pressure from clients and governments to diversify production, Taiwanese giant TSMC opened an $8.6 billion chip factory in southern Japan in February and plans a second facility for advanced chips.
The Biden administration is also investing in U.S. chip manufacturing, allocating $6.1 billion for Micron and $6.6 billion for TSMC.
Japan must find ways to power its new energy-intensive projects, from chip production to managing AI model training data centers, as it relies heavily on fossil fuel imports. The government is working to restart nuclear power plants that were shut down following the Fukushima disaster in 2011.