Government strategy aims to scale semiconductor output and capture growing AI-driven electronics demand.
Japan is planning a major expansion of its semiconductor industry, setting a target to increase sales of domestically produced chips eightfold by 2040 as the country seeks to regain competitiveness in the global electronics supply chain.
Under the new strategy, Japan aims to raise annual sales of locally manufactured semiconductors to about 40 trillion yen (roughly $250 billion) by 2040, compared with around five trillion yen in 2020. The government has also set an interim target of about 15 trillion yen in chip sales by 2030.
The plan reflects Tokyo’s effort to reposition itself in a market now dominated by Taiwan and other Asian manufacturers. During the 1980s, Japan controlled roughly half of the global semiconductor market, but its share has since fallen to below 10 percent due to industry restructuring, slower digital adoption and trade tensions with the United States.
Officials say renewed investment in fabrication plants and advanced chip technologies will be central to the strategy. The government expects demand for semiconductors to surge as artificial intelligence, cloud computing, smartphones and automotive electronics require increasingly powerful processors and memory chips.
New manufacturing capacity is already being developed to support the goal. Japanese chipmaker Rapidus is building a facility designed to produce cutting-edge two-nanometre semiconductors, with mass production planned for 2027.
Global industry leaders are also expanding operations in the country. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer, is developing advanced semiconductor production lines in Japan as part of broader efforts to strengthen supply chains for high-performance electronics.
The initiative aligns with Japan’s broader economic security strategy, which identifies semiconductors as critical infrastructure for next-generation technologies including AI, electric vehicles and advanced communications networks.
Government projections suggest the global semiconductor market could reach about 190 trillion yen by 2035, driven largely by demand for AI processing and high-performance computing systems.
By significantly expanding domestic production capacity, policymakers hope Japanese firms will capture a larger share of this rapidly growing electronics market while reducing reliance on overseas chip suppliers.
