Japan Says Chips Boost Key To Post-Pandemic Stimulus Push

Japan is set on boosting its chip industry as part of its huge multi-trillion-yen national stimulus package.

The plan will also include a strategy for the country’s storage battery industry, Trade minister Koichi Hagiuda said on Monday, as Tokyo plots a path out of the Covid pandemic.

Hagiuda unveiled the plan days before Prime Minister Fumio Kishida is set to formally announce the stimulus package and followed an announcement by Taiwan Semiconductor Manufacturing Co (TSMC) last week on the planned construction of a $7 billion chip plant in Japan with Sony Group, a move that was welcomed by the Japanese government.

Japan’s chipmaking sector, once the world’s No-1 industry in the 1980s, has struggled to maintain its competitive edge, going into steady decline in the past three decades, as regional rivals such as Taiwan advanced.

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“A major cause of the lost three decades was the lack of digital investment,” Hagiuda told a panel meeting at the ministry.

“Many of the problems Japan faces could be resolved by making use of digital technology … The key to post-corona growth is to revitalise broader digital investment nationwide.”

Hagiuda said the government was considering steps to encourage the establishment of large-scale production sites for storage batteries, which he said held the key to achieving green and digital targets.

Japan wants TSMC, the world’s leading contract chipmaker, to build plants to supply chips to Japan’s electronic device makers and automakers as trade friction between the United States and China could hurt supply chains and demand for the key component grows.

Japan will promote production bases for semiconductors, Covid-19 vaccines and drugs as part of a stimulus plan, which calls for the government and the central bank to share a strong sense of urgency while retaining an appropriate mix of monetary and fiscal policies.