japan's semiconductor strategy: a response to us competition
Tokyo, Wednesday, 9 July 2025.
Japan is revamping its semiconductor policies to compete with the United States. This shift involves legal and strategic adjustments. The goal is to strengthen national security and gain an economic edge in the critical semiconductor industry. By 2030, Japan aims to triple domestic sales for semiconductor-related companies to over JPY 15 trillion. These changes reflect a worldwide push for domestic chip production. Monitoring these actions is crucial for investors. The moves will impact the global semiconductor supply chain and affect major players like NVIDIA, ASML, and TSMC.
Government initiatives and investment
Japan’s Ministry of Economy, Trade and Industry (METI) is central to this strategy [1]. METI aims to boost domestic sales of semiconductor-related companies from JPY 5 trillion in 2020 to over JPY 15 trillion by 2030 [1]. This involves enhancing basic production capacity, next-generation technology collaboration with the U.S., and R&D for future technologies [1]. The Japanese government amended the 5G Promotion Act and the Industrial Competitiveness Enhancement Act to support semiconductor investment [1]. These amendments came into effect on March 1, 2022 [1].
Legislative and financial backing
In December 2022, Japan designated semiconductors as ‘Specified Critical Materials’ under the Economic Security Promotion Act [1]. On November 22, 2024, the government approved comprehensive economic measures focusing on AI and semiconductors [1]. This includes over JPY 50 trillion in combined public and private investment planned over seven years, leading up to fiscal year 2030 [1]. As of May 16, 2025, the Japanese government certified 24 supply assurance plans for semiconductors, with subsidies totaling approximately JPY 428.77 billion [1].
U.S. competition and collaboration
The U.S. has also prioritized its semiconductor industry, demonstrated by the CHIPS and Science Act of 2022 [1]. This act allocated $52.7 billion for semiconductor manufacturing, research, and workforce development [1]. By August 2024, the CHIPS Act had spurred over $30 billion in private investments across more than 20 semiconductor projects in 15 states [1]. These investments are expected to create over 115,000 jobs [1]. The U.S. aims to produce 30% of the world’s advanced chips by 2032 [1].
Strategic partnerships and market impact
Rapidus Corporation, established on August 10, 2022, aims to begin mass production of next-generation semiconductors by 2027 [1]. This is supported by up to JPY 920 billion in R&D funding from the Japanese government [1]. Rapidus and IBM announced a strategic partnership on December 12, 2022, to jointly develop 2 nm node semiconductor technology [1]. These strategic moves signal long-term growth potential [GPT]. Investors should monitor progress in these partnerships for future market opportunities [GPT].
Potential trade tensions and market volatility
Recent U.S. trade policies, including new tariffs on imports from various countries, add complexity to the semiconductor landscape [5]. On July 7, President Trump began notifying 14 countries, including Japan, of new tariffs effective August 1 [5]. Japan faces a 25% tariff [5]. These tariffs could trigger market volatility [alert! ‘Tariffs often lead to market fluctuations’], affecting stock performance for companies involved in international trade [5]. Investors should closely watch trade negotiations and policy changes [GPT].