The Japanese government has finalized its fiscal 2026 industrial policy budget, with total allocations for the Ministry of Economy, Trade and Industry (METI) surging 50% to 30.7 trillion yen. Within this, a staggering 1.23 trillion yen (approx. $79 billion) is dedicated to semiconductors and AI — a nearly fourfold increase from previous levels — underscoring Japan's strategic push to reclaim leadership in critical technologies.
A key shift in this budget is the elevation of semiconductors and AI from traditional R&D projects to core industrial infrastructure. This transition ensures stable "base" funding instead of inconsistent one-off grants, providing long-term financial security for wafer fab construction, equipment manufacturing, and other capital-intensive, multi-year initiatives. Approved by the cabinet and now under parliamentary debate, the budget is set to take effect in April 2026 as part of Japan's broader growth and strategic resilience agenda.
Funding is strategically channeled into key areas: 150 billion yen is earmarked for the Rapidus project, supporting 2nm process development and advanced packaging pilot production, targeting mass production in 2027 and an IPO by 2031. Total government investment in Rapidus is expected to reach 250 billion yen, with plans for over 1 trillion yen in follow-on funding. Separately, 387.3 billion yen is allocated to AI, spanning foundation models, data infrastructure, and "physical AI" applications. An additional 5 billion yen is dedicated to securing critical minerals like rare earths, while 122 billion yen supports decarbonization projects, reinforcing supply chain security and sustainable growth.
Market attention is focused on execution efficiency: whether sustained investment can help Rapidus accelerate mask development, achieve pilot production milestones, and attract more partners; and whether AI funding can translate into stronger domestic demand for advanced packaging, memory, and data center infrastructure. These outcomes will directly shape Japan's renewed competitiveness in global tech. Rapidus has already rallied nearly 30 corporate shareholders, including Honda, Canon, and Sony, and plans to secure 130 billion yen in private financing within 2025, creating a public-private collaborative framework.
ICgoodFind Perspective: Japan's increased investment in chip and AI infrastructure will reshape the global supply chain landscape. We are committed to helping industry players access high-quality resources and capitalize on emerging opportunities.
