Plan to spend 1 trillion yen each year! Japan, who frequently makes mistakes in the "technology tree," this time is all-in on semiconductors and AI.

A Japanese member of parliament responsible for chip manufacturing and AI budgeting stated that under the leadership of Sanae Takaichi, the ruling party of Japan plans to raise approximately 1 trillion yen (approximately $65 billion) annually to continue supporting the development of advanced semiconductor manufacturing in Japan and hardware and software ecosystems comparable to NVIDIA's artificial intelligence stack. This plan also signifies Japan's desire to reclaim the title of "chip manufacturing hegemon" and to seek to become an "AI superpower" on par with China and the United States. Kan Yamamoto, the secretary-general of the Liberal Democratic Party's parliamentary alliance in support of domestic chip manufacturing in Japan, stated in an interview with reporters that starting from the new fiscal year in April next year, most government funds will be raised through regular budgets, rather than through additional budgets in the current fiscal year. Following a meeting of the LDP parliamentary alliance, Kan Yamamoto told reporters on Thursday that this change will differ from how the government has raised funds in recent years. Previously, the government relied on additional budgets to provide funds for its comprehensive revival strategy for chip manufacturing. Yamamoto stated that the government expects this shift to help ensure more stable funding sources and obtain funds in a manner that does not affect market stability. Statistics from Japan's Ministry of Economy, Trade, and Industry show that since the establishment of the new domestic semiconductor revival strategy in 2021, Japan has allocated approximately 5.7 trillion yen to support the domestic semiconductor and artificial intelligence sectors. The majority of these funds come from additional budgets rather than regular budget measures. Yamamoto stated, "Since we are not sure if this approach will be successful, we have only pushed forward through additional budgets in the past. But from now on, the proportion of the Ministry of Economy, Trade, and Industry's funding in regular fiscal year budgets will increase significantly. Therefore, funding from additional budgets will decrease, thereby achieving more stable government fund operations." In the supplementary budget allocated last year, approximately 1.5 trillion yen was earmarked for support related to semiconductors and artificial intelligence, fulfilling former Prime Minister Yoshihide Suga's commitment to provide over 10 trillion yen in new public support for these technological fields. The 1 trillion yen planned by the LDP will also be included in this massive investment commitment. Of all the government funds allocated, approximately 1.7 trillion yen was allocated to Rapidus Corp., dubbed the "Japanese version of TSMC," with the aim of mass-producing the world's most cutting-edge 2nm process chips by 2027. Rapidus is considered Japan's core player in advanced chip manufacturing and is positioned as a counterpart to TSMC's advanced logic chip foundries. Micron Technology Inc., a U.S.-based storage chip giant, received support of 774.5 billion yen for its large chip factory in Hiroshima. Currently, the majority of the world's most advanced artificial intelligence chips are manufactured and packaged by TSMC. While the Japanese government subsidizes TSMC's construction of multiple large chip manufacturing facilities in Japan, it is also intensifying efforts to advance the production plans of Japan's domestic chip manufacturers. Rapidus, a newcomer in Japan's chip manufacturing industry established in 2022, has received substantial financial support from the Japanese government and strong support from major Japanese companies, including Toyota, Sony, NEC, NTT, SoftBank, and Denso. Rapidus previously partnered with IBM to introduce its 2nm GAAFET process technology, and the Japanese government is striving to help Rapidus achieve mass production of 2nm chips by 2027 for cutting-edge fields such as artificial intelligence, autonomous driving, and quantum computing. For major investment projects in Japan's domestic chip manufacturing sector, the Japanese government is quickly issuing subsidies covering up to 50% of construction costs. This highly efficient subsidy ratio has attracted industry leaders such as TSMC, Micron, and Samsung Electronics to establish factories in Japan, especially since Japan is a global leader in semiconductor equipment and high-end semiconductor raw materials, with giants such as Tokyo Electron, Tosoh, and Shin-Etsu Chemical in this field. Therefore, chip manufacturing giants like TSMC are more willing to go to Japan to build factories. "Abenomics 2.0" is poised for action, with significant incremental funding for semiconductor and AI industries. At the age of 64, Japan's new Prime Minister Sanae Takaichi is a conservative nationalist who lists former British Prime Minister Margaret Thatcher as one of her role models. She has been a long-time ally of the longest-serving Prime Minister of Japan, Shinzo Abe, and a staunch follower of his policies, which is why financial markets are now betting on the resurgence of "Abenomics." Recently, the so-called "Takaichi Trade" refers to the expectations in financial markets for the restarting of core policies under "Abenomics" following the victory of Sanae Takaichi, the new president of the Liberal Democratic Party of Japan. The "Takaichi Trade" is mainly reflected in the rapid rise of the Japanese stock market, continued depreciation of the yen, and the resumption of "yen carry trades." Therefore, betting on the "Takaichi Trade" logic is essentially the same as betting on a "stronger fiscal stimulus, industrial support, and moderate monetary policy" combination for Japan's inflation -- going long on Japanese stocks, shorting the yen, and avoiding long-term bonds. If Sanae Takaichi fully continues the positive fiscal and expansionary industrial support policies led by Shinzo Abe during his tenure, it will be very positive for Japan's domestic demand and core technology industries such as chips, AI data centers, and industries related to national security, especially as the semiconductor, artificial intelligence, and quantum computing industries may receive significant incremental investments from the Japanese government. The theoretical framework of "Abenomics" is a long-term positive catalyst for the Japanese stock market and even global stock markets, especially for technology stocks. Therefore, if Sanae Takaichi's policies focus on tax cuts/cash subsidies and the ambitious goal of "comprehensive investment in Japan," along with a foreseeable path of continuing expansionary fiscal policies, it will undoubtedly drive the long-term bull market trajectory of the Nikkei 225 and TOPIX indices, particularly benefiting AI computing industries, semiconductors, energy, advanced manufacturing, and defense industries. Japan, known for frequently picking the wrong "technology tree," is now betting on semiconductors and AI. Will they get it right this time? One of the impressions left by Japan's development in the past thirty years is their frequent misjudgments in choosing the right direction for technology development. Due to continuously missing the mark on the country's development trajectory, Japan failed to catch up during the early 21st century boom of the internet industry dominated by IT technologies. Looking at the current highly anticipated Fourth Industrial Revolution in key areas such as quantum technology, electric vehicles, and 5G/6G communications, the absence of Japan among the top global players is noticeable. This time, as global enterprises are making moves in the AI big model and AI intelligent body fields, and governments around the world are striving to elevate "chip manufacturing" to a national security level where core economic powers aim to firmly grasp chip manufacturing capacities in their own hands, the Japanese government is increasing its bets on the semiconductor and AI sectors, hoping to become one of the top leaders in these two cutting-edge technology fields.