Japan, EU, and Others Invest Billions in Semiconductor and AI Development

According to the Semiconductor Industry Association (SIA), global semiconductor sales in the third quarter of 2024 increased by 23.2% year-on-year and 10.7% quarter-on-quarter.

This year, AI, big data, and electric vehicles have driven the rapid growth of the semiconductor industry. Countries such as China, the U.S., India, South Korea, Japan, the EU, and Southeast Asia are heavily investing in the semiconductor industry, seeking greater control over the chip supply chain and a favorable position in the global semiconductor market. Recently, new initiatives were announced by the EU and Japan to boost their semiconductor strategies.

EU: €133 Million for Photonic Chips

According to the Dutch government, on November 11, the EU announced a €133 million (approximately 1.02 billion RMB) investment to build a photonic integrated circuit (PIC) pilot line in the Netherlands. This initiative aims to strengthen Europe's competitive edge in photonic technologies.

The photonic integrated circuit pilot line in the Netherlands is part of the PIXEurope project, which is expected to begin construction by mid-2025. If successful, it will significantly promote the development and application of photonic technology in Europe. Organizations such as TNO, Eindhoven University of Technology, and the University of Twente have been awarded contracts for the pilot line construction, with Dutch companies like Smart Photonics also participating.

The overall investment in the PIXEurope project amounts to €380 million (approximately 2.93 billion RMB), aimed at establishing advanced PIC pilot production lines.

Photonics is considered a strategic technology due to its high computational density and low power consumption, making it an important direction for future technological development. With the rapid development of cloud computing, big data, AI, and IoT, demand for high-speed, efficient, and low-energy data transmission has surged, driving continuous growth in the photonic chip market.

In addition to the EU, China is also actively investing in the photonic chip industry, rolling out a series of policies to support industry growth. For example, Guangdong Province released an action plan on October 21 to accelerate the innovative development of the photonic chip industry from 2024 to 2030, focusing on strengthening foundational research, advancing key material technologies, and supporting industry chain improvements.

Japan: 10 Trillion Yen Investment in Semiconductors and AI

On November 11, Japanese Prime Minister Shigeru Ishiba announced that the Japanese government will invest at least 10 trillion yen (approximately $65 billion) by fiscal year 2030 to support the semiconductor and AI industries.

This plan is part of a larger initiative that the Japanese government is expected to approve on November 22, which includes a total semiconductor investment of 50 trillion yen over the next decade. One of the beneficiaries will be Rapidus, a state-supported project for mass production of advanced chips.

Support will take the form of subsidies, investments by government-affiliated institutions, and loan guarantees for private financial groups. Ishiba emphasized that Japan will not issue deficit government bonds to fund the plan.

The draft plan aims to strengthen AI and semiconductor industries, with an expected total economic impact of 160 trillion yen by fiscal year 2030. According to Nikkei, relevant departments and institutions are preparing legislation to provide debt guarantees and investments for Rapidus, with a goal of submitting proposals to the National Diet by 2025.

Rapidus is projected to begin mass production of new chips in 2027, with support from the Japanese government. The government has already provided 920 billion yen, and the Rapidus project will need 5 trillion yen to achieve mass production. Rapidus plans to collaborate with IBM and Belgium's research institute Imec to start large-scale production in Hokkaido in 2027.

From an economic security perspective, Japan believes that establishing advanced semiconductor capabilities is essential. Due to the low predictability of single-year subsidies, the government has adjusted its approach to provide multi-year support.

South Korea: Semiconductor Special Act

According to Business Korea, on November 11, South Korea introduced a Semiconductor Special Act aimed at providing financial support to semiconductor manufacturers and allowing exceptions to the 52-hour workweek limit under specific conditions. This law reflects the South Korean government's commitment to supporting the semiconductor industry.

The act specifies a dedicated semiconductor account to enhance competitiveness and supply chain stability in the industry. South Korea will offer upfront subsidies to manufacturers to encourage active investment during the planning stages.

Industry insiders believe that the introduction and passage of this law will have a profound impact on South Korea's semiconductor sector. Financial support will help manufacturers reduce production costs and improve profitability, while exceptions to workweek restrictions will ease labor constraints and increase production efficiency. The act also provides a solid legal foundation to maintain and enhance South Korea's competitiveness in the global semiconductor market.

Facing international competition, South Korea has continuously increased its semiconductor investments, including financial support, building industrial parks, and promoting technological innovation. The Chosun Ilbo reported that since July, South Korea has offered incentives and subsidies to semiconductor companies, launching a 26 trillion won ($19 billion) funding plan to support the industry. The country plans to establish an 800 billion won semiconductor ecosystem fund by 2027, with 300 billion won expected to be raised by 2025 to invest in materials, components, equipment, and fabless companies.