The Japanese government, through the Ministry of Economy, Trade and Industry (METI), has announced plans to nearly quadruple budget support for the development of cutting-edge semiconductors and artificial intelligence in the next fiscal year 2026 budget, which begins in April 2026.
Under a recently announced plan by Japan’s Ministry of Industry, the budget to support cutting-edge semiconductor and artificial intelligence development will increase to about 1.23 trillion yen ($7.9 billion) in the fiscal year starting in April.
The Ministry of Economy, Trade and Industry’s overall budget increased by almost 50% year-on-year, mainly due to a surge in spending on chips and AI. The Sanae Takaichi Cabinet signed this. However, there are still plans to debate the government’s original budget proposal in parliament in the new year.
Japan quadruples next year’s AI spending plan
Japan is paying more attention to this Spending on chips and AI The aim is to strengthen frontier technology capabilities to catch up with the US and China. Even though the two countries no longer impose tariffs on each other, relations remain tense, with Japan seeking to secure better access to supply chains for key technologies.
Japan’s ministry will try to secure most of the additional funding for chips and AI in the regular budget from the start of next fiscal year, according to reports. The ministry had previously taken a more ad hoc approach, funding it through a supplementary budget drafted at the end of the year. The move is expected to provide more stable funding for each sector.
Of the total amount set aside for semiconductor and AI development, 150 billion yen was allocated to Lapidus, a state-supported chip venture, bringing the total government investment in this venture to 250 billion yen.
For AI, 387.3 billion yen will be allocated to the development of domestically-based AI models, strengthening of data infrastructure, and “physical AI” in which AI controls robots and machines.
The broader budget includes 5 billion yen for securing key minerals, including rare earths, and 122 billion yen for decarbonization and the development of so-called next-generation nuclear power plants.
As part of the bilateral trade agreement, approximately 1.78 trillion yen in special bonds will also be issued to support government-backed Japan Trade and Investment Insurance to support Japanese investment in the United States.
Japan’s fiscal stimulus expected to boost growth next year
revelation of Plan to increase The Ministry of Economy, Trade and Industry’s budget for AI and semiconductors came after the Japanese government revised its economic outlook for next year, based on expectations that growth will accelerate next year. reported Written by Cryptopolitan.
This argument is based on the view that the massive economic stimulus package will boost consumption and business investment. The stimulus package, which the administration finalized in November, was paid for in this year’s supplementary budget, which focused on cushioning the blow to household finances from rising living costs.
The amount is worth about 21.3 trillion yen ($136.7 billion) and includes benefits for families with children, subsidies to reduce utility costs, and fiscal stimulus to encourage investment in areas such as infrastructure, artificial intelligence and semiconductor chips.
Package results, latest forecasts approved The Cabinet expects Japan’s economy to grow 1.1% this fiscal year, higher than the 0.7% growth estimated in August, as the hit from U.S. tariffs was smaller than expected.
According to forecasts, growth is expected to accelerate to 1.3% in fiscal 2026 as stimulus measures offset weak overseas demand and boost consumption and capital investment.
The government expects consumption to increase by 1.3% next fiscal year, but capital investment could rise by 2.8% in fiscal 2026, exceeding the estimated 1.9% increase this fiscal year.
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