Japan invests $1.3 billion in Micron to subsidize chip manufacturing: Report

The Japanese government on Tuesday said that it had invested $1.3 billion in Micron’s Hiroshima factory as subsidy for manufacturing more advanced chips that support or power AI and quantum workloads.

The investment is expected to cover the cost of installing ASML Holding’s extreme ultraviolet lithography equipment at the factory, according to a Bloomberg report. Lithography machines are used to draw patterns on silicon chips using light, and Dutch company ASML Holdings is one of the top producers of these lithography machines.

The Japanese government’s investment in Micron covers almost 40% of the company’s planned capital infusion in Japan and is aimed at securing a strong supply of advanced chips for the future, the report cited Economy Minister Yasutoshi Nishimura as saying.

The capital injection into Micron comes at a time when the US-headquartered firm is facing a probe from Chinese regulators as a result of the ongoing chip war between the US and China, threatening to put majority of the company’s sales in the Asian  market at risk.

Micron attracted the ire of the Chinese government after the US, in January, convinced the Netherlands and Japan to join it in expanding the ban on exports of chip-making technology to China.

The US first imposed restrictions on exports of chips to China in 2015, extending them in 2021 and twice in 2022. The most recent restrictions were introduced in December.

US lawmakers have also been urging the Biden administration to take more action to impede China’s progress in gaining dominance in areas such as artificial intelligence and quantum computing.

The suggestions included imposing trade restrictions on Chinese memory chip maker Changxin Memory Technologies as a counteroffensive to China’s ban on the use of Micron’s chips.

In addition to the $1.3 billion investment, the Japanese government has set aside a sum of $1.11 billion and $170 million to help Micron cover production and development costs for the advanced chips, respectively, according to the Bloomberg report.