Japan’s Ministry of Economy, Trade and Industry is set to increase budgeted support for AI and semiconductors to approximately ¥1.23 trillion, with Prime Minister Sanae Takaichi’s cabinet approving the draft initial FY2026 budget, according to reporting from Digitimes and related coverage. The plan includes ¥150 billion earmarked for Rapidus’s 2nm chip venture and nearly ¥400 billion for “Physical AI” initiatives.
The funding extends Japan’s heavy backing of state-supported chipmaker Rapidus, which is building a 2-nanometer logic fab in Chitose, Hokkaido, targeting mass production in 2027.
The “Physical AI” allocation reflects Tokyo’s strategy to embed AI into robotics and manufacturing, an area where Japan sees a path to defend its industrial base.
For investors, the budget signals durable, multi-year state capital behind Japan’s effort to rebuild leading-edge chip capacity and commercialize AI-driven robotics.