The Japanese government is seizing on the momentum of supply chain reorganization and US–China rivalry to revitalize its domestic semiconductor industry. Building resilient supply chains for national security also justified the Japanese government’s promotion of strategic industries through lavish subsidies.

The Japanese government has allocated JP¥4 trillion (US$25.4 billion) to subsidize investment in the semiconductor industry—the largest among Organisation for Economic Co-operation and Development (OECD) countries in terms of gross domestic product. Both Japanese and foreign semiconductor firms are eligible for subsidies. Taiwan’s TSMC received JP¥1.2 trillion (US$7.6 billion) for its first two factories in Kumamoto enabling the production of more advanced 28- to six-nanometer chips.

Even the South Korean company Samsung, the archrival of Japan’s Sony, received a subsidy of JP¥20 billion (US$127 million) to build a semiconductor research center in Yokohama. With a subsidy of JP¥920 billion (US$5.8 billion), Rapidus, a new chip venture founded by seven Japanese companies including Toyota and Softbank, aims to manufacture two-nanometer chips in collaboration with the US company IBM in 2027.

The friendshoring strategy has strengthened coordination in industrial policies between Japan and the US and elevated Japan’s role in global supply chain reorganization, providing fresh impetus for Japan to re-industrialize and regain growth momentum. Japan can take advantage of its involvement in multilateral free trade initiatives, including the US’s Indo- Pacific Economic Framework for Prosperity (IPEF) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to strengthen its regional leadership in building sustainable and resilient global supply chains.