Japan Increases Semiconductor Funding As US Trade Policies Pressure Taiwan Semiconductor

Japanese Prime Minister Shigeru Ishiba committed over $64.9 billion to boost the nation’s semiconductor and artificial intelligence (AI) industries.

The initiative seeks to maintain Japan’s competitive edge in advanced technologies, responding to similar moves by other global powers, especially the U.S. and China.

The planned financial package, which totals over 10 trillion yen (approximately $64.91 billion), aims to drive public and private investment of over 50 trillion yen by fiscal 2030, Taipei Times reports.

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Bloomberg cites a draft that indicates this initiative will be part of an upcoming economic stimulus package designed to generate an estimated economic impact of 160 trillion yen.

During a recent news conference in Tokyo, Ishiba highlighted successful regional development projects, like Taiwan Semiconductor Manufacturing Co’s TSM chip plant in Kumamoto Prefecture, as examples of the growth he aims to replicate nationwide.

Earlier reports suggested that Taiwan Semiconductor aimed to build a second facility in Japan’s Kumamoto, considering a $13.5 billion investment following its initial $8.6 billion wafer factory in the region.

The company is also planning a third high-tech chip production facility valued at $20 billion in Kumamoto to manufacture 3-nanometer chips.

Japan’s new framework will introduce public support mechanisms, such as outsourcing and financial aid, to enhance predictability for private investors.

Japan’s previous investments, initiated by former Prime Minister Fumio Kishida, included a 4 trillion yen package supporting the semiconductor sector, with significant allocations like 920 billion yen directed towards Rapidus Corp in Hokkaido.

Prime Minister Ishiba confirmed that the government will not increase taxes to finance the new framework. Instead, the administration is exploring alternatives, such as issuing bonds backed by assets like shares of NTT Corp.

Donald Trump’s recent election win has created uncertainties for Taiwan Semiconductor and Asian countries like China and Japan. His criticism of Taiwan and possible shifts in trade policies may influence the contract chipmaker’s strategic choices, especially in terms of its global investments and partnerships.

The U.S. government recently imposed limits on Taiwan Semiconductor, banning advanced AI chip sales to China, which accounted for 11% of Taiwan Semiconductor’s third-quarter revenue.

In previous interactions, Trump had pushed Japan to significantly increase its financial contribution to hosting U.S. troops.

Trump’s expected picks for top cabinet positions signal a more aggressive U.S. stance towards China while aiming to reassure American allies like Japan, the Japan Times reports.

Reports suggest Sen. Marco Rubio (R-FL) is set to be nominated as Secretary of State. At the same time, Rep. Mike Waltz (R-FL) will likely become the next National Security Adviser. Rubio’s firm position on China and consistent support for the U.S.-Japan alliance could ease Tokyo’s concerns about Trump’s transactional approach to defense agreements.

Price Action: TSM stock is trading higher by 0.75% to $193.20 premarket at the last check on Wednesday.

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