Japan Allocates $13 Billion for Domestic Semiconductor Revival

Tokyo Bets Big on Chip Manufacturing

Japan's Ministry of Economy, Trade and Industry has approved a supplementary budget allocation of approximately ¥2 trillion ($13 billion) for domestic semiconductor manufacturing. The funds will support construction of new fabs, R&D in advanced packaging, and workforce development programs through 2028.

Economy Minister Yasutoshi Nishimura said the investment is necessary to "secure Japan's position in the global semiconductor supply chain, which is now a matter of economic security." Japan currently accounts for roughly 9% of global chip production, down from over 50% in the 1980s.

Rapidus Gets the Largest Share

Rapidus, the consortium-backed startup aiming to produce 2nm chips in Hokkaido, will receive approximately $5.5 billion of the total package. The company's Chitose fab is under construction and scheduled to begin producing test chips by late 2025, with volume production targeted for 2027.

Rapidus CEO Atsuyoshi Koike acknowledged the ambitious timeline. "We are compressing what normally takes a decade into three years. IBM's technology partnership and our engineering team's determination make this achievable," he said at a press conference in Sapporo.

TSMC Japan Expands

TSMC's Kumamoto fab, operated through subsidiary JASM, will receive an additional $3.2 billion to accelerate its second phase of construction. The first phase, producing chips on mature 12nm and 22nm nodes, began operations in February 2024. Phase two will bring 6nm capability online by 2027.

Sony, Toyota, and Denso — all investors in JASM — have committed to offtake agreements that guarantee demand for the Kumamoto fab's output. The facility currently employs about 1,700 workers.

Memory and Packaging Also Funded

Kioxia and Micron's Japan operations will share approximately $2 billion for NAND and DRAM expansion. The remaining funds target advanced packaging research — an area where Japan's materials companies like Ajinomoto, Shin-Etsu, and JSR already hold dominant global positions.

Analysts at Nomura Securities estimate that the full investment package could push Japan's share of global chip production back above 12% by 2030, though they caution that sustained government support and workforce availability will be critical to achieving that target.