Japan is making significant strides in the global semiconductor landscape, outpacing the United States and Germany in terms of subsidy allocation relative to its GDP. According to a recent report by Nikkei, Japan has committed 3.9 trillion yen (approximately $25.5 billion) over the next three years to bolster its semiconductor sector, representing 0.71% of its gross domestic product.
In comparison, the United States is allocating a larger nominal amount of 7.1 trillion yen over five years. However, this investment accounts for only 0.21% of its GDP, less than a third of Japan's commitment. Germany follows with a 2.5 trillion yen investment, making up 0.41% of its GDP, while France has allocated 700 billion yen, or 0.2% of its GDP, over the same period.
Despite the higher nominal investments by the U.S., Japan's focused approach highlights its determination to lead in semiconductor manufacturing. The U.S. Department of Commerce has recently announced up to $6.6 billion in direct funding for Taiwan Semiconductor Manufacturing Company Limited (TSMC), while Japan's Finance Ministry is channeling funds through GX bonds aimed at green transformation projects. These bonds are expected to raise around 20 trillion yen over a decade, supporting Japan's goal of achieving net-zero greenhouse gas emissions by 2050.
However, challenges remain. Only about 500 billion yen of Japan's semiconductor funding is currently backed by secured finances, raising concerns about the sustainability of its investment strategy. Experts from the Council on Economic and Fiscal Policy have urged Japan to develop medium- to long-term strategies to ensure predictability and secure funding sources, which are crucial for attracting private sector investments.
Hiroya Masuda, President and CEO of Japan Post Holdings, emphasized the need for a substantial commitment to the semiconductor sector, stating, \"It's a common understanding among council members that the benefits of the fiscal spending will be rigorously verified.\"
As the global demand for advanced semiconductors continues to rise, Japan's proactive investment strategy positions it as a key player in shaping the future of technology and economic growth.
Reference(s):
Japan leads U.S., Germany in chip subsidies as share of GDP: Nikkei
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