(Bloomberg) -- The Japanese government approved 774 billion yen ($6.8 billion) in funding for domestic semiconductor investment, backing up Prime Minister Fumio Kishida’s commitment to make the nation a major global provider of essential computer chips.
The package, part of an extra budget for this fiscal year that the Cabinet signed off on Friday, consists of three parts: 617 billion yen to fund domestic investment into cutting-edge chip manufacturing production capacity, 47 billion yen for legacy production such as analog chips and power management parts, as well as 110 billion yen for the research and development of next-generation silicon.
Tokyo will spend part of the 617 billion yen package on a planned semiconductor plant by Taiwan Semiconductor Manufacturing Co. and Sony Group Corp. in Kumamoto prefecture. While the Ministry of Economy, Trade and Industry hasn’t elaborated on the exact amount that will be used for the project, it has said it would pay “up to half” of the total investment needed for a project in this category. For legacy chip production, aid for up to one-third of the total capital expenditure will be provided, the ministry said.
The approved budget is just the beginning of increased investment in the sector, with Japan’s ruling party and government both making it a priority to support companies beefing up semiconductor production. Developing technology trends ranging from 5G wireless communication to autonomous driving and the metaverse require massive computing power, and supply-chain snarls over the past year have highlighted the need to fortify domestic chipmaking capacity.
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