Japan's $10 Trillion Tech Gambit: Chips, AI, and a Race to Dominate the Future

Japan just dropped a 1.5 trillion ($9.9 billion) bombshell to supercharge its chip and AI ambitions, with the government's latest budget signaling it's all-in on next-gen tech. 1.05 trillion will go toward R&D for cutting-edge chips and quantum computing, while another 471.4 billion is earmarked for ramping up domestic chip production. Rapidus Corp., Japan's moonshot chipmaker, stands to gain big here, although the exact slice of this pie it'll get is still TBD. Prime Minister Shigeru Ishiba isn't messing aroundhe's pledged a whopping 10 trillion in tech support by 2030, positioning chips as the backbone of Japan's economic security and global competitiveness.

Rapidus is aiming to crank out advanced chips by 2027, but it's far from a solo act. Tokyo's strategy includes pouring billions into heavyweights like Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) and Micron Technology (NASDAQ:MU) to shore up Japan's tech supply chain. And it doesn't stop there: companies like Denso (DNZOF) and Fuji Electric (FELTF) are cashing in too, with hefty subsidies aimed at boosting electric vehicle chip production. The message is clearJapan isn't just playing defense against the U.S. and China in the semiconductor game; it's building an offensive strategy to lead the next wave of tech innovation.

Meanwhile, the timing couldn't be better. A fresh study from the Bank of Japan shows that without its ultra-loose monetary policies since 2013, Japan could've been stuck in deflation hell for years. For investors, this is a golden moment. Japan is doubling down on structural reforms and big-ticket tech investments, making it a prime playground for anyone looking to ride the AI and semiconductor boom.

This article first appeared on GuruFocus.