March 11, 2026 /SemiMedia/ — Government of Japan plans to grow the country’s semiconductor industry to 40 trillion yen ($253 billion) in annual sales by 2040 as demand rises for chips used in artificial intelligence and data centers.

The target is part of a new national growth strategy that will be finalized later this year. Officials aim to expand investment through public-private partnerships and strengthen Japan’s role in the global chip supply chain.

A key focus is semiconductors used in “physical AI”, including chips that power robots and automated machines. Japan believes it has strong technology in this area and hopes to capture around 30% of the global market in the long term.

The government also plans to build advanced semiconductor research and design centers to support next-generation chips for areas such as autonomous driving and industrial automation.

To attract more investment, Japan is preparing industrial land for new fabs and improving infrastructure such as electricity and water supply. Lawmakers are also reviewing changes to the Industrial Competitiveness Act that would ease restrictions on industrial water use for semiconductor and data-center projects.

Chip investment in Japan has already picked up in recent years, including a new fabrication plant by TSMC in Kumamoto and advanced chip development led by Rapidus in Hokkaido.

Tokyo has also pledged more than 10 trillion yen in public funding over seven years to support the development of AI and semiconductor industries.