(July 24): Prime Minister Fumio Kishida’s administration is drafting legislation to propel further investment in Japan's chipmaking capacity.

The government plans to submit “as soon as possible” a bill to the Diet that would support research and development of next-generation chips and their mass production, Kishida told reporters.

“Domestic investment in AI (artificial intelligence) and semiconductors needs to expand and continue,” Kishida said during a visit to state-backed Rapidus Corp’s foundry in Chitose, Hokkaido on Wednesday. “The government will secure the necessary financing to provide large-scale and systematic support for priority investments that include mass production and research and development over multiple years.”

Tokyo has said it will diversify support to the country’s chip supply chain, which it sees as critical to catch up in AI. Options may involve extending public guarantees on loans to the sector. Rapidus is the country’s most ambitious effort in the sector yet, with plans to manufacture state-of-the-art two-nanometre chips that would be tailored for customers designs.

To enable full-scale mass production at Rapidus, Japan will also need to secure a stable supply of cheap and clean power sources, Kishida said. “We want to explore ways we can secure such decarbonised power sources.”

Intensifying rivalry between the US and China is spurring governments around the world to produce their own semiconductors, which are crucial for running cars, power plants and weapons systems, as well as consumer electronics. The US has also pledged billions of dollars to chipmakers.

Japan has already earmarked some ¥4 trillion (US$26 billion or RM120.84 billion) over the last three years to recharge its semiconductor sectors and promote digitalisation. Of the sum, up to ¥920 billion is slated for Rapidus’ bid to produce cutting-edge chips and compete with Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co.

While it’s home to many of the world’s top manufacturers of chip gear and materials, Japan has lost ground in the high-margin areas of designing and manufacturing memory and logic chips.

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