The Japanese government has come under fire after it allegedly used unspent Covid-19 relief funds to support state-funded chipmaker Rapidus.
According to a report from Nikkei Asia, the move has been described as misappropriation by opposition lawmakers, an allegation that prime minister Shigeru Ishiba denies.
In November 2024, the Japanese government announced plans to invest approximately $65 billion to support the country’s semiconductor and AI industries over seven years. However, $8.3bn in funding was included in Japan’s supplementary budget, and of that $8.3bn, $6.26bn had been intended to support SMEs during the Covid-19 pandemic.
According to the report, Ishiba decided to reallocate the funds in order to avoid issuing deficit-covering bonds. Opposition politician Satoshi Honjo reportedly described the move as “nothing more than misappropriation” at a budget meeting in December.
Prime minister Ishiba denied the claim, arguing that because the unspent Covid-19 relief funds had been returned to the treasury, the decision was a legitimate one.
Rapidus was founded in November 2022 when the Japanese government and eight Japanese technology and automotive firms, including SoftBank, Sony, and NTT, invested more than $500 million to launch the business.
In December 2024, the company took delivery of an ASML TWINSCAN NXE:3800E, an EUV lithography tool needed to make advanced chips. In a statement at the time, Rapidus said the delivery of the system represented a “significant milestone for Japan’s semiconductor industry, marking the first time that an EUV lithography tool will be used for mass production in the country.”