According to the Nikkei Asia report, Japan will undertake part of the capital investment related to various semiconductors, expand the incentives for domestic chip manufacturing, and make it surpass cutting-edge products. The Ministry of Economy and Industry will allocate 368.6 billion yen (US $2.8 billion) from the additional budget of 1.3 trillion yen in the 2022 fiscal year to fund the new subsidy plan formulated by the government.

These subsidies cover investment in power chips, microcontrollers for automatic steering and analog-to-digital converters, chip manufacturing equipment and semiconductor components, and raw materials such as inert gas. Domestic and foreign companies investing in Japan are eligible for subsidies.

The policy requires these companies to continue to produce semiconductors in Japan within 10 years. During the semiconductor shortage, they will be required to give priority to domestic shipments in Japan.

Japan previously allocated 774 billion yen in the supplementary budget for the 2021 fiscal year to support the domestic chip industry. TSMC is currently building its first Japanese factory in Kumamoto Prefecture. The establishment of TSMC's factory in Japan for the first time in Juyangcho, Kumamoto Prefecture, has led to the influx of Japanese and foreign enterprises, which has led to the growing shortage of industrial land around.

According to the report, other countries have also increased incentives for chip manufacturing, hoping to increase domestic supply in the increasingly fragmented supply chain. Biden signed the CHIPS and Science Act in August last year, and the United States will provide 52.7 billion dollars worth of subsidies for domestic chip manufacturing.

"This may lead to excess global capital investment," said a Japanese chip industry organization.