Japan launches US$670 million semiconductor subsidy scheme

In a bid to enhance economic security and strengthen supply chains, the Japanese government is providing subsidies for domestic production in sectors such as semiconductors, advanced electronic components, and batteries.

The subsidy plan approved by Japan's Ministry of Economy, Trade and Industry (METI) for 2024 includes eight initiatives. These encompass a collaboration between Denso and Fuji Electric on silicon carbide (SiC) power semiconductor production, along with projects related to semiconductor equipment, materials, and electronic components, totaling approximately JPY101.7 billion (US$670 million). A condition for receiving these subsidies is that production must continue for at least ten years after commencement.

Power semiconductor project secures largest funding

The initiative for enhancing SiC power semiconductors, spearheaded by a collaboration between Denso and Fuji Electric, was awarded a significant subsidy of JPY70.5 billion (US$465 million).

METI has stipulated that projects must be at least JPY200.0 billion in scale. This allows multiple companies to apply, fostering collaboration and integration across factories. The Japanese government hopes that by centralizing production sites, Japanese firms can attain supply capabilities on par with their European and American counterparts in the power semiconductor industry.

Equipment and materials supply chain expansion

Additionally, METI has recently approved five new subsidy plans focused on semiconductor equipment and materials.

Kanadevia plans to boost its production of semiconductor manufacturing equipment components with a JPY2.7 billion investment, aided by a JPY900.0 million subsidy. The production is projected to start in April 2027, aiming for an annual output of 2,050 units.

Concurrently, C.I.Takiron is set to expand its manufacturing of plastic plates for semiconductor equipment, investing JPY4.4 billion and benefiting from a subsidy of up to JPY1.4 billion. They plan to begin supply in January 2027 with an estimated annual output of 2,000 tons.

Mitsui Chemicals, through its venture Chemours-Mitsui Fluoroproducts, plans to enhance its production capacity for semiconductor equipment plastics by 60% with an investment of JPY27.5 billion. The expansion, supported by a maximum subsidy of JPY8.0 billion, is set to begin production in December 2028. Similarly, Mitsubishi Chemical is investing JPY11.1 billion to boost its synthetic quartz powder production by 35%. This project, also benefiting from subsidies up to JPY3.7 billion, aims to start supply in September 2028.

Toyo Gosei is set to boost the production capacity of three factories focused on advanced photoresist raw materials, including photosensitive materials, polymers, and high-purity solvents. This enhancement involves a total investment of JPY21.1 billion with a maximum subsidy of JPY7.0 billion. The supply of high-purity solvents is scheduled to commence in September 2027, while photosensitive materials and polymers will be supplied starting in April 2029, increasing production capacity by 40% compared to 2024 levels.

BAW filter production capacity boost

In advanced electronic components, METI has approved two subsidy plans to enhance bulk acoustic wave (BAW) filter production capacity.

Skyworks Filter Solutions Japan is set to expand its production capacity for BAW filters with an investment of JPY13.4 billion and will receive subsidies up to JPY4.4 billion. They plan to begin supplying these filters in April 2027 with an expected annual output of 28,800 pieces. Similarly, Murata Manufacturing Co. is increasing its BAW filter production capacity at its facility in Kanazawa, Ishikawa Prefecture, with a project valued at JPY16.4 billion and a subsidy cap of JPY5.4 billion. Murata aims to start supplying in March 2028, with a targeted annual output of 480 million units.

Since the fiscal year 2023, METI has supported supply chain enhancement projects under the Economic Security Promotion Law. By December 2023, 18 projects have received approval. Notably, the largest subsidy has been awarded to a joint effort by Rohm and Toshiba to increase their SiC power semiconductor and wafer production capacity. This initiative involves a total investment of JPY388.3 billion and can receive a maximum subsidy of JPY129.4 billion.

Source: METI, December 2024

Source: METI, December 2024

Article translated by Jingyue Hsiao