Prime Minister Sanae Takaichi unveiled a long-term investment plan calling for more than ¥370 trillion ($2.3 trillion) of public and private investment over 14 years ending in March 2041 [1, 2]. The plan focuses on artificial intelligence, semiconductors, defense, space, shipbuilding, and other key sectors [1, 2].

Of the total budget, ¥101.6 trillion is earmarked specifically for AI and chip spending. Most of this will go toward semiconductors and vertical AI tailored to specific industries [1, 2]. The government projects economic spillovers by fiscal 2040 of ¥443 trillion from semiconductor investments, ¥144 trillion from physical AI, and ¥222 trillion from vertical AI [1, 2].

The investment aims to ease supply chain bottlenecks and address labor shortages caused by Japan’s aging population [1, 2]. The strategy calls for a mix of public and private funding, with the government expected to contribute just under half the total if inflation remains stable [1, 2].

Since 2021, the government allocated about ¥7.2 trillion toward semiconductors and AI, including roughly ¥2.6 trillion to the state-backed chip venture Rapidus [1, 2].

Finance Minister Satsuki Katayama confirmed the government’s commitment to fiscal discipline. She said, "The prime minister made clear yesterday that the investment framework will be of a necessary and sufficient scale while ensuring fiscal sustainability" [3]. Katayama added, "Just because growth-related spending is no longer subject to the usual spending caps doesn’t mean anything goes. Wasteful spending is still wasteful, and priority areas remain priorities" [3].

The government plans a new multi-year budget framework distinct from the annual budget process to oversee these long-term growth projects [3]. Katayama also stressed reviewing and reprioritizing tax breaks, subsidies, and spending to avoid waste while supporting priority sectors [3].

Prime Minister Takaichi unveiled the plan and related policy documents on June 24, 2026, after a policy advisory panel meeting [1, 2]. Bond strategists voiced concerns about pressure on Japan’s government bond market the next day [4]. On June 26, Finance Minister Katayama publicly confirmed the fiscal discipline approach during the investment rollout [3].