Japan Steps Up Support For Its Semiconductor Industry

(MENAFN– Asia Times) Japan’s ruling Liberal Democratic Party plans to include 10 years of incentives for the semiconductor and other industries in a tax reform package that is likely to take effect next year.

In the meantime, the Ministry of Economy, Trade and Industry (METI) has decided to subsidize semiconductor makers Rohm and Toshiba’s collaborative investment in power devices for electric vehicles (EVs) and industrial use.

In addition to semiconductors, tax breaks are to be given to four other industries deemed to be strategic and/or eco-friendly: electric vehicles and batteries, sustainable aviation fuel made from biomass, steel produced with renewable energy, and chemical products made from biomass and recycled waste products.

These are industries with growth potential in which Japan has the technology required to be internationally competitive. In the case of semiconductors, the proliferation of government promotion schemes around the world makes it imperative for Japan to do the same.

Qualified semiconductor producers will reportedly be eligible for a reduction in corporate income tax of up to 20%, with the amount of reduction depending on the volume of production and sales. If a company makes a net loss, the tax break may be carried over to the next fiscal year for up to three years running.

Companies will have until the end of the fiscal year ending March 2026 to submit their business plans for qualification. Subsidies will run for 10 years following the acceptance of a company’s plan.

Prime Minister Fumio Kishida has said he favors a system that supports industries that require large initial investments and have high operating costs. To that end, on November 29, the Japanese Diet passed a supplementary budget that includes slightly more than 2 trillion yen (about US$14 billion) in subsidies for the semiconductor industry.

Source from Interret