JAPAN is aiming to secure an additional 1.49 trillion yen (S$13.5 billion) in subsidies for two key semiconductor projects, according to a key ruling party lawmaker for chips.

Up to 900 billion yen would be set aside for a second Taiwan Semiconductor Manufacturing (TSMC) factory in Kumamoto, southwestern Japan, while 590 billion yen would be earmarked for Japan’s homegrown chip venture Rapidus, said Yoshihiro Seki, secretary general of the Liberal Democratic Party’s lawmaker coalition on semiconductors.

The economy ministry has made the subsidies part of its request for an upcoming extra budget in the current fiscal year, he said on Wednesday (Oct 25).

The figures were first reported by local media earlier this month. As with other budget items in Japan, the final figures may still change through discussions with the finance ministry.

The second TSMC factory is estimated to cost roughly 2 trillion yen, and is expected to make 6-12 nanometre logic chips, devices that will be used for products like electric vehicles, Seki said.

In order to justify the higher-than-usual level of subsidies for the TSMC plant, the government will press for additional incentives for Japan in exchange for the help, Seki said. That may include support such as TSMC training Japanese engineers, and conducting joint research with Japanese companies.

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For these types of projects, subsidies usually account for around one-third of the cost, Seki said. The 900 billion yen figure would mean the government will foot significantly more than a third of the new TSMC plant’s bill.

Japan is already shouldering roughly half of the cost of the first TSMC factory in Kumamoto, with up to 476 billion yen in subsidies. The government has also already pledged 330 billion yen for Rapidus, which aims to make 2 nanometer logic chips in northern Hokkaido. BLOOMBERG