Japan will allocate hundreds of billions to support the construction of chip factories

Among other things, the government is investing about JPY 400 billion in a new plant that TSMC wants to set up in southwestern Japan as part of the stimulus package. TSMC said this month that it would build a $ 7 billion ($ 158.5 billion) chip factory in Japan with Sony. The government welcomed the investment.

The remaining 200 billion JPY will go to other chip races. Several projects are currently being considered, including a project by the American memory chip manufacturer Micron Technology and the Japanese company Kioxia Holdings.

The Japanese chip manufacturing sector was the largest in the 1980s. However, it failed to keep up with the competition and has been steadily declining over the last three decades as its competitors, like Taiwanese manufacturers, have gained momentum.

Due to accelerating digitization and growth in data center investment, demand for memory chips is expected to grow in the medium to long term. The Japanese Ministry of Industry said that securing a stable supply of advanced semiconductors is the most important security issue in connection with a plan to invest in strengthening semiconductor production.

The Japanese government approved a record 55.7 trillion yen to help the pandemic economy this month. To help fund, the government is set to approve an additional budget for this fiscal year of 31.9 trillion yen. Fiscal year 2021 ends in March.

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