Semiconductors anchor Takaichi’s 68 trillion yen push
2026-08-10
Strategic investment pillar
The Sanae Takaichi administration has placed semiconductors at the core of its 17 strategic sectors. Its public-private investment roadmap calls for 68 trillion yen in spending by fiscal 2040, equal to one-sixth of the total investment planned across all fields. It aims to revive Japanese semiconductors by focusing on cutting-edge chips for generative AI.
Rapidus at the core
A symbolic name is Rapidus, which has a manufacturing plant in Chitose, Hokkaido. Taishiro Yamagiwa, head of the Liberal Democratic Party lawmakers' group promoting semiconductor strategy, said 'Next year's mass production must not fail under any circumstances. The government needs to prepare so that the required amount of funding is firmly provided.' Rapidus plans mass production of advanced logic semiconductors used for AI inference, training and computing.
The government has decided to provide about 2.4 trillion yen in research and development outsourcing costs by 2026, and will also draw in private lending through debt guarantees. It plans to continue nurturing the sector in a united public-private effort.
Global market expansion
The rush by the government and the ruling LDP to support semiconductors reflects the sharp expansion of the global market as generative AI spreads. World Semiconductor Trade Statistics (WSTS) forecasts the global market will reach 1.5112 trillion dollars in 2026, up 90% from 2025.
In South Korea, investment competition among companies working on advanced products is fierce. Samsung Electronics and SK Hynix announced in June they would build four semiconductor plants in South Korea, with total investment of 800 trillion won, or about 90 trillion yen. In the United States, the CHIPS and Science Act, enacted under the previous Biden administration to bolster the semiconductor industry, is driving moves to deploy more than 50 billion dollars, or about 8 trillion yen, in subsidies.
Japan's prospects and challenges
Japan's strategy is to concentrate investment in cutting-edge fields with an eye on the advance of AI. Yamagiwa said 'No one can predict how generative AI will evolve, but we do know that even higher-performance cutting-edge chips will be needed.'
In addition to Rapidus, Kioxia produces NAND flash memory used for long-term data storage. Flash memory is suited to high-speed reading and writing, and demand is also expanding for AI inference applications. In semiconductor design, Fujitsu is advancing development of cutting-edge products.
The government has also attracted investment from overseas companies. Micron Technology of the United States will produce advanced high-bandwidth memory, or HBM, along with other products in the second half of 2028. Taiwan Semiconductor Manufacturing Co. told Prime Minister Takaichi in February that it plans to change the semiconductors it will produce at its second Kumamoto plant under construction in Kikuyo, Kumamoto prefecture, from 6-nanometer chips to 3-nanometer chips.
Risk management and geopolitics
Japanese companies were the world's top semiconductor sellers in the 1980s, but lost competitiveness amid the Japan-U.S. semiconductor agreement and intensifying global competition. Yamagiwa said that in the past there was a view that government involvement should be kept to a minimum, but that is no longer the case.
Toshihiro Nagahama, a private-sector member of the Council on Economic and Fiscal Policy, says such huge investment requires risk management. 'While running the PDCA cycle, it will be necessary to respond flexibly, such as deciding to withdraw if conditions are tough,' he said. The Ministry of Economy, Trade and Industry still remembers Elpida Memory, which collapsed after receiving state support.
Nagahama said it is important to create a situation in which the world has no choice but to rely on Japanese materials and manufacturing equipment, arguing that support should be prioritized for areas where Japan has strengths. Yoshihiro Seki, secretary-general of the LDP lawmakers' group promoting semiconductor strategy, also said 'Competition in the semiconductor industry is a struggle for strategic advantage in the international community. It is necessary to cooperate with countries that share the same values.' Cooperation with trusted nations will also help improve the resilience of Japan's entire manufacturing sector.
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