At the center of the ongoing trade war between the US and China, Japan banned exports of advanced computer chips and other semiconductor products, including high-power ultraviolet lithography machines, in early 2023.
In late 2023, as the global trend toward artificial intelligence (AI) chip production became clear, Japan decided to invest significantly in the semiconductor industry, announcing additional policies to support production and research in the field. The decision was made with the aim of significantly enhancing Japan's chip production capabilities and putting the country at the forefront of semiconductor technology, on par with the United States.
Japan's ruling Liberal Democratic Party announced a 10-year package of incentives for semiconductors and other industries in a tax reform plan expected to take effect as early as 2024.
Meanwhile, Japan's Ministry of Economy, Trade and Industry (METI) has decided to subsidize joint investment projects by semiconductor manufacturers Rohm and Toshiba related to equipment for electric vehicles as well as industrial use.
In addition to semiconductors, four other industries considered strategic or environmentally friendly will receive tax breaks: electric vehicles and batteries, clean aviation fuel, steel produced using renewable energy sources, and chemicals made from natural materials. These are all growth-promising industries where Japan has the technology needed to compete internationally.
For the semiconductor sector in particular, eligible manufacturers will receive a corporate income tax reduction of up to 20%, with the reduction depending on production and sales volume. If a company incurs a net loss, the tax liability can be carried forward to the next financial year for up to three years.
Companies will have until the end of the fiscal year ending March 2026 to submit their business plans for eligibility. The subsidies will be valid for 10 years after the company's business plan is approved.
Prime Minister Fumio Kishida said that a system to support semiconductor-related industries would require large initial investments and high operating costs. To achieve this goal, the Japanese parliament on November 29 approved a supplementary budget of more than 2 trillion yen (about $14 billion) in subsidies for the semiconductor industry.
In addition to providing financial support to its domestic semiconductor industry, Japan is also looking to form partnerships with other regulatory entities and strengthen its global position in the chip industry. To this end, the EU-Japan Digital Partnership has been established.
In addition to focusing on issues related to submarine cable connectivity, investment in quantum computing, high-performance computing and artificial intelligence, the mechanism will also monitor the global chip supply chain and provide support to Japanese semiconductor companies that want to operate in the European Union.
(according to OL)
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