TOKYO, December 26, 2025 – Japan’s Ministry of Economy, Trade and Industry has requested ¥1.23 trillion ($7.9 billion) for advanced semiconductors and artificial intelligence in the fiscal 2026 budget, nearly four times the previous allocation, as the government seeks to revive domestic production and strengthen technological competitiveness.
The proposal, part of METI’s overall ¥3.07 trillion budget request approved by the cabinet on Friday, reflects a 50% increase in the ministry’s spending.
It includes substantial support for Rapidus Corp., the consortium aiming to mass-produce 2-nanometer chips by 2027 in Hokkaido.
Prime Minister Sanae Takaichi’s administration views the investment as critical for economic security amid global supply chain vulnerabilities and rivalry with China and the United States.
A ministry official stated the funds would accelerate next-generation chip development and AI infrastructure , though specific breakdowns await parliamentary approval in the new year.
The request builds on prior supplementary budgets, providing ¥300-400 billion annually for similar initiatives. It follows the incentives that attracted facilities from Taiwan Semiconductor Manufacturing Co. and Micron Technology.
Japan once held half the global semiconductor market but now accounts for about 10%. The strategy aims to reclaim share in advanced nodes while fostering AI applications in manufacturing and healthcare.
Parliament is expected to debate the full fiscal plan early next year. Critics note Japan’s high public debt may constrain long-term commitments, but supporters argue the spending is essential for strategic autonomy.
