[News] Nikkei Highlights Japan’s Chip Subsidies Exceeding GDP Ratio of US, Germany, and France

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According to a report by Nikkei News, Japan’s official support for the semiconductor industry expenditure, relative to its gross domestic product (GDP), is significantly higher than that of the United States and other major Western countries.

Figures submitted by a subcommittee under Japan’s Ministry of Finance’s Fiscal System Council show that Japan will invest JPY 3.9 trillion (approximately USD 25.7 billion) over the next three years, equivalent to 0.71% of its GDP. In comparison, the United States will invest more, with JPY 7.1 trillion over five years, but this represents only 0.21% of its GDP, less than one-third of Japan’s ratio.

Over the next five years, France’s expenditure amounts to JPY 700 billion, equivalent to 0.2% of its GDP. Germany’s expenditure stands at JPY 2.5 trillion, equivalent to 0.41% of its GDP.

On Monday, the U.S. Department of Commerce announced a direct subsidy of up to USD 6.6 billion to TSMC, aiming to attract more investments from TSMC within the United States. Meanwhile, in Japan, TSMC secured approximately JPY 1.2 trillion (USD 7.5 billion).

Nikkei notes that Japan’s JPY 3.9 trillion investment in the semiconductor industry involves supplementary budgets, leading to a sharp increase in spending. Thus, the Ministry of Finance is concerned about the lack of funding sources for official support of semiconductor manufacturing. According to Nikkei News, only over JPY 500 billion of Japan’s semiconductor industry expenditures have been covered by actual funds.

One funding source is GX bonds, which the government has started issuing for economic green transformation to achieve net-zero emissions by 2050. GX bonds are expected to raise approximately JPY 20 trillion over the next decade, to be repaid using carbon tax revenue.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

Read more

• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab
• [News] Subsidies to TSMC from Japan and China Increase Over Fivefold Annually

(Photo credit: TSMC)