Japan’s government stepped up measures to boost its domestic semiconductor industry, moving beyond supporting the production phase with JPY160 billion ($1 billion) to be spent on incentives for chip design companies, Nikkei Asia reported.

The Ministry of Economy Trade and Industry will back tech companies, start-ups and universities working on advanced chips for AI workloads, data centres, base stations, self-driving vehicles and robots for up to five years, the newspaper wrote.

Counterpoint Research director Marc Einstein told Mobile World Live Japan’s government is keen to bring the domestic semiconductor sector “back to its glory days of the 1980s” after a rude awakening during the pandemic, when manufacture of several products including automobiles was halted due to chip shortages. 

He added the weak yen makes the country an attractive place for manufacturing, but the country has a serious shortage of semiconductor engineers.

To move comes just three months after the nation introduced a JPY10 trillion package of subsidies and incentives to support mass production of advanced chips used for AI applications.

Japan’s support aims to keep domestic companies competitive as China, South Korea and the US spend heavily on subsidies to boost local production. 

In May 2024, China launched an ambitious CNY344 billion ($46.9 billion) third chip fund backed by the Ministry of Finance and six state-owned banks to support the local industry with loans over a ten-year period.

The funding announcement came days after the South Korean government unveiled a KRW26 trillion ($17.8 billion) support package for its chipmaking sector.

The US CHIPS and Science Act earmarked $52 billion in funding to boost domestic semiconductor research and manufacturing, attracting investments from Samsung and Taiwan Semiconductor Manufacturing Co to set up factories.