Japan ramps up tech ambitions with $65 billion for AI, chips
TOKYO
This photo taken on May 10, 2023 shows people visiting the booth for US computing giant Nvidia during the three-day 7th AI Expo, part of NexTech Week Tokyo 2023, Japan's largest trade show for artificial intelligence technology companies, at Tokyo Big Sight.
Japan is readying a $65-billion push in microchips and artificial intelligence aimed at reclaiming its status as a global tech leader and meeting the urgent challenges of its ageing, shrinking population.
The 10-trillion-yen package, which lawmakers could approve this week, is also seen as preparation for an uncertain world as fears grow of a potential Chinese invasion of chip powerhouse Taiwan.
But analysts warn that question marks remain over worker shortages and whether Japan can generate enough electricity for energy-hungry AI data centers.
After dominating in tech hardware during the 1980s, "Japan had a quite a long period of almost just sitting back and observing a lot of this innovation, particularly when it comes to artificial intelligence", said Kelly Forbes, president of the AI Asia Pacific Institute.
"What we have seen in the last maybe two to three years is Japan really waking up to the potential" of such developments, she told AFP.
Japanese tech investor SoftBank and U.S. computing giant Nvidia last week unveiled ambitious proposals to build an "AI grid" across the nation.
That followed a flurry of U.S. investments earlier this year, including from Microsoft, a partner of ChatGPT-maker OpenAI.
AI-powered automation can help Japan, which has the world's second-oldest population after Monaco, said Seth Hays, author of the Asia AI Policy Monitor newsletter.
"Demographically speaking, Japan's just going to be crunched on that," he said.
So "they need to utilise AI in order to get those productivity gains that keep the country going."
The new government money will bolster Japan's home-grown Rapidus project to produce next-generation semiconductors.
Tokyo has already promised up to four trillion yen in subsidies to help triple sales of domestically produced microchips by 2030.
"Semiconductors are really at the core of AI innovation," said Forbes.
Most of the world's chips are made in Taiwan but fears are growing of a blockade or invasion by Beijing, which claims the self-ruled island as part of its territory.
Facing pressure from customers and governments to diversify its production, Taiwanese chip giant TSMC in February opened a $8.6-billion chip factory in southern Japan, and is planning a second facility in the country for more advanced chips.
Japan's investments are an attempt "to remain competitive in that space, but also... to stay prepared around this geopolitical tension that we know is growing", Forbes said.
But the country needs to find a way to power these energy-intensive projects, from chip manufacturing to running data centres to train AI models.
Japan is heavily dependent on fossil fuel imports, with the government working to bring back online nuclear plants that were halted after the 2011 Fukushima disaster.
"In Taiwan, TSMC takes up eight percent of our electricity," said Hays. "Where's Japan going to get the energy?"
