TOKYO, Nov 10 — Japan’s government said today that it plans to spend ¥2 trillion (RM61.2 billion) to boost domestic production of strategically important semiconductors and generative AI technology.

The planned outlays will include ¥700 billion to support the construction of a Taiwan Semiconductor Manufacturing Company (TSMC) plant in Kumamoto, the firm’s second plant in the southern Japanese region, trade ministry official Motoki Kurita told AFP.

TSMC controls more than half of the world’s output of microchips, which are used in everything from smartphones to cars and missiles.

Kurita said the government will also spend ¥650 billion to support Japanese startup Rapidus, which aims to develop next-generation microchips.

Prime Minister Fumio Kishida’s cabinet approved the draft supplementary budget for the chip- and AI-related subsidies today as part of a more than US$100 billion (RM471 billion0 stimulus package he announced last week.

The extra budget plan for this fiscal year will now be submitted to parliament for approval.

The move comes as pandemic disruptions and tensions with China have raised concerns globally about the risks to existing chip supply chains.

France, Israel, and the United States have also looked to incentivise chip-making at home or to take greater control of production.

Japan’s competitiveness as a producer of cutting-edge semiconductors and related products has waned in recent years, and Kishida’s government has sought to boost production of the vital technologies. — AFP