Japan has approved a new ¥250 billion (approx. $1.6 billion) supplementary budget to support artificial intelligence development, semiconductor production capacity, and the resilience of critical mineral supply chains—marking another significant step in Tokyo’s long-term industrial revival strategy.
The measures were endorsed by Prime Minister Sanae Takaichi’s cabinet on Friday and now move to the Diet for final approval. Given the ruling coalition’s majority in the lower house, the package is widely expected to pass without major obstacles.
Japanese official media emphasize that although this year’s package is smaller than last year’s massive ¥1.5 trillion special allocation, the government is transitioning to a more predictable funding model. Instead of relying on ad-hoc supplementary budgets, Tokyo aims to embed semiconductor and AI spending into regular annual appropriations, ensuring stable, multi-year policy continuity for industry partners.
Analysts quoted by Nikkei Asia say this shift reflects Japan’s recognition that AI and chip investment must be long-term, structural commitments, not short-term stimulus tools.
Since Japan launched its modern semiconductor strategy in 2021, the government has already committed approximately ¥5.7 trillion to strategic hubs, including:
- Rapidus – Tokyo’s flagship national semiconductor project, now progressing toward mass production of 2-nm chips by 2027.
- TSMC Kumamoto Plants (JASM) – receiving extensive Japanese subsidies to build two fabs set to significantly boost global supply.
- Micron Hiroshima – upgrading facilities for DRAM and cutting-edge extreme ultraviolet (EUV) processes.
Together, these projects form the backbone of Japan’s effort to regain technological leadership and secure its position in global supply chains amid growing US–China tensions.
The supplementary budget allocates ¥100 billion to strengthen the capital base of Nippon Export and Investment Insurance (NEXI).
NEXI is expected to be a key instrument in delivering portions of the $550 billion US–Japan strategic investment program covering advanced manufacturing, infrastructure, and clean technologies. Bloomberg reports that Japan intends to use NEXI to de-risk outbound investments and ensure Japanese companies can expand in critical sectors aligned with US industrial policy.
Japan is also seeking ¥93.7 billion to help private companies secure stable access to rare minerals and critical materials, including lithium, cobalt, nickel, and rare earth elements. The funding will:
- Support overseas resource exploration
- Expand long-term purchase agreements
- Increase national stockpiles
- Reduce Japan’s dependency on Chinese-controlled supply chains
METI officials underline that the diversification of rare mineral sources is now a national priority, as these inputs are essential for EV batteries, robots, defense systems, and next-generation chips.
The new ¥250 billion package reflects Tokyo’s broader policy direction: building technological sovereignty, reinforcing supply-chain security, and accelerating domestic innovation in AI and advanced semiconductor manufacturing.
With the Diet’s approval expected in the coming weeks, Japan is positioned to deepen its momentum in one of the world’s most competitive and geopolitically sensitive industries.
