The Japanese government has decided to provide a subsidy of 192 billion yen (about $1.3 billion) for the building of a plant of the American company Micron Technology in Hiroshima.

This decision of the leadership of this Asian country is an action within the framework of Tokyo’s efforts aimed at stimulating local production of next-generation chips.

Government funding will help an American company from Idaho to install equipment from the Dutch firm ASML Holding NV at a Japanese factory, which is necessary for extreme ultraviolet lithography, which is a link in the production process of advanced chips. This was announced on Tuesday, October 3, by the Minister of Economy, Trade and Industry of Japan Yasutoshi Nishimura. He noted that advanced chips are needed to create artificial intelligence technologies, data centers, and autonomous driving systems.

The financial support, the provision of which was approved by the Japanese government, covers almost 40% of the investment plans of the American company.

Yasutoshi Nishimura says that the current state of affairs in the market is not characterized by such forms of condition as stability and sustainability, which is why, according to him, assistance from the state is required, especially relevant in difficult periods. The minister said this during a regular press conference, implying a global downturn in the microcircuit industry, which significantly worsened the profitability of Micron Technology. Yasutoshi Nishimura also said that the government finances projects in the technology sector in order to ensure the supply of advanced chips, which are an important component in the package of measures to ensure the future economic security of the country.

According to experts, receiving subsidies in Japan can be described as a victory for Micron Technology, which is currently trying to solve the problem of uncertainty in China, one of the largest markets. A bipartisan group of U.S. senators plans to hold a meeting with Chinese President Xi Jinping next week. Preliminary information says that during the expected negotiations, attention may be paid to the investigation that Chinese regulators are conducting in relation to Micron Technology. The company said that due to these actions of the authorities, half of its sales in China were under threat.

Yasutoshi Nishimura stated that the Japanese government has allocated a maximum of 167 billion yen (about $1.1 billion) for the production costs of Micron Technology and 25 billion yen ($166 million) to cover the costs associated with the development. The American company said that its expenses under the Japanese project will amount to about 500 billion yen ($3.3 billion). The manufacturer intends to create in this country what is called one-gamma technology.

The support from the Japanese government is important for the mentioned company not only against the background of uncertainty in China but also in the context of the fact that the efforts of the United States to stimulate the development of the local chip sector are gradually approaching a deadlock, which is due to factors such as labor problems and slow provision of financing. An example of the problems identified in the United States is the fact that the world’s largest manufacturer of microcircuits Taiwan Semiconductor Manufacturing Company in the summer announced the postponement of the start of production at its plant in Arizona to 2025. Currently, a factory of a Taiwanese company is being built in the south of Japan. The implementation of the project does not face serious difficulties and barriers that are extremely difficult to overcome. The Government covers almost half of the costs associated with the implementation of this project.

The administration of Japanese Prime Minister Fumio Kishida has approved the provision of multibillion-dollar subsidies with the aim of tripling the production of chips in the country by 2030. The government of the country is striving to regain its leadership in the technology industry. Negotiations are currently underway on the construction of a second factory of the aforementioned Taiwanese manufacturer in Japan. Also, the government of the country finances the local company Rapidus for the production of its own advanced chips.

Micron Technology has a kind of history of interaction with Japan. In 2013, the company acquired the business of local DRAM maker Elpida Memory. Micron Technology reported that currently more than 4 thousand engineers and technicians work under its management in Japan.

Yasutoshi Nishimura, speaking about promising ways of developing the country, noted that if there are good jobs, young people will stay closer to home, and this potential favorable trend will create a positive ripple effect for the regional economy. He also expressed hope that the country will be able to nurture chip-related talents. These statements were made in the context of the state strategy for the development of the advanced technology sector.

As we have reported earlier, Mizuho to Create Fund to Support Japanese Tech Startups.