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Japan Bets $65 Billion on AI and Microchips to Regain Global Tech Leadership
In a bold move to reclaim its tech dominance, Japan is investing in microchips and artificial intelligence to tackle its aging population and global tech challenges. Will the country’s energy resources and worker shortages stand in the way?
ND
by News Desk
2024-11-20
Japan Bets $65 Billion on AI and Microchips to Regain Global Tech Leadership

Japan is preparing to invest a substantial 10 trillion yen ($65 billion) in microchips and artificial intelligence (AI), aiming to reclaim its status as a global leader in technology while addressing the challenges posed by its aging and shrinking population. The ambitious funding package, which could be approved by lawmakers this week, is designed to bolster Japan’s tech sector and secure its position in the face of growing geopolitical tensions, particularly concerns about Taiwan.

Having once dominated tech hardware in the 1980s, Japan has recently begun reasserting itself in AI and microchip development. Kelly Forbes, president of the AI Asia Pacific Institute, noted that Japan had “sat back and observed a lot of this innovation” in AI for some time but is now awakening to its potential.

The investment plans include boosting Japan’s Rapidus project, which aims to produce next-generation semiconductors and reduce dependence on Taiwan, the current global leader in chip production. Taiwan Semiconductor Manufacturing Company (TSMC), under pressure to diversify production, opened an $8.6 billion chip factory in southern Japan earlier this year and is planning a second facility for more advanced chips. The U.S. has also committed billions in investments for domestic chip production, further emphasizing the global race for technological supremacy.

The AI push is seen as critical for Japan’s future, as it confronts the economic challenges of its aging population, which is the second oldest globally. Experts suggest that AI-powered automation will be key to maintaining productivity as the country’s workforce shrinks. Seth Hays, an expert on Asian AI policy, stressed that Japan must leverage AI to continue growing in a time of demographic crunch.

However, Japan faces significant challenges, particularly regarding energy supply for these energy-hungry AI data centers and chip manufacturing plants. Japan currently relies heavily on fossil fuel imports and is working to revive its nuclear power plants after the 2011 Fukushima disaster. With growing concerns about Taiwan’s chip industry and the potential for conflict with China, Japan must find ways to ensure that its energy infrastructure can meet the demands of these high-tech projects.

In addition to investing in hardware, Japan is fostering a regulatory environment conducive to AI development. The country’s copyright laws are among the most AI-friendly globally, allowing companies to use copyrighted data for AI training, which could give Japan a competitive edge. Japan has also been at the forefront of international AI discussions, including at last year’s G7 summit.

Despite the ambitious plans, analysts caution that Japan’s road to technological revival is not without hurdles. Energy shortages and worker shortages are significant risks to the country’s ability to capitalize on its tech investments. The government’s pledge to attract 50 trillion yen in public and private AI and microchip investments over the next decade will be essential in determining Japan’s future in this critical sector.

As Japan attempts to reinvent itself as a tech leader, these investments are seen as a way to address both global competition and domestic challenges, setting the stage for a technological revolution that could reshape the country’s future.
Tagged:

AI

JapanTech

Microchips
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