On December 26, news emerged that Japan's Ministry of Economy, Trade and Industry (METI) is set to dramatically ramp up its budgetary support for research and development in cutting-edge semiconductor and artificial intelligence (AI) technologies. For the upcoming fiscal year, which commences in April, the budget allocation will soar to around JPY 1.23 trillion (roughly USD 7.9 billion), marking an almost fourfold increase from the previous year's figure.

The ministry's overall budget for the year will see a roughly 50% hike compared to the last fiscal year, reaching JPY 3.07 trillion. This substantial growth is mainly attributed to a significant uptick in spending within the chip and AI sectors.

It has been reported that the extra funds earmarked for semiconductors and AI in the new fiscal year will predominantly be sourced from the regular budget. This approach, rather than depending on year-end supplementary budgets, is intended to furnish the industry with more consistent and reliable financial backing.

In the semiconductor domain, METI has already funneled JPY 150 billion into the state-owned chip firm Rapidus. As a result, the government's cumulative investment in this company now stands at JPY 250 billion.

Regarding AI, a planned investment of JPY 387.3 billion is slated to be utilized for several key purposes. These include the development of domestic foundational models, the enhancement of data infrastructure, and the promotion of research and development in what is termed 'physical AI'—AI that is designed to control robots and machinery.