Japan unveils $2.3 trillion investment plan targeting AI, semiconductors and 17 strategic sectors through 2040

Jun 22, 2026

Japan has unveiled a sweeping 370 trillion yen ($2.3 trillion) public-private investment plan targeting 17 strategic sectors through fiscal 2040. Championed by Prime Minister Sanae Takaichi, the strategy allocates 101.6 trillion yen to artificial intelligence and semiconductors to drive economic security and counter a severe labor shortage. While the government projects a 2% GDP growth rate and a declining debt-to-GDP ratio, rising ultra-long-term bond yields reflect investor anxiety over Japan's fiscal discipline.

Japan $2.3 trillion investment plan

▪Prime Minister Sanae Takaichi presented the long-term investment strategy at a joint meeting of the Council for Japan's Growth Strategy and the Council on Economic and Fiscal Policy on June 24, 2026.
▪The investment plan covers 17 strategic sectors and 62 designated products and technologies deemed critical to economic security.
▪The Japanese government announced a plan targeting 370 trillion yen ($2.3 trillion) in combined public and private investment by fiscal 2040.

Semiconductor manufacturing funding priorities

▪Japan aims to increase its annual domestic chip sales from the current 8 trillion yen to 40 trillion yen by 2040.
▪The Japanese government allocated 68 trillion yen ($420 billion) of the total investment target specifically to semiconductors.

Artificial intelligence industrial applications

▪The Japanese government estimates that investment in artificial intelligence will generate 443 trillion yen in economic impact.
▪The Japanese government earmarked 10.5 trillion yen ($65.1 billion) for physical artificial intelligence, which integrates AI into robots and autonomous devices.

Strategic sector investment allocation

▪The investment plan projects 20.8 trillion yen for biopharmaceuticals and regenerative medicine, and 3 trillion yen for nuclear fusion technology.
▪The investment plan allocates 101.6 trillion yen, nearly one-third of the total budget, exclusively to artificial intelligence and semiconductors.
▪The investment plan projects 32.7 trillion yen for data centers and storage batteries by fiscal 2035, and 30 trillion yen for the content sector by fiscal 2033.

Debt-to-GDP ratio projections

▪The Japanese government expects Japan's inflation-adjusted gross domestic product to grow by nearly 2 percent by fiscal 2040 under the growth strategy.
▪The Japanese government projects that the national debt-to-GDP ratio will gradually decline if the growth strategy is successfully implemented.

Government bond yield pressures

▪The draft investment plan lacks specific details on the exact extent of government spending, raising concerns about Japan's fiscal position.
▪Japan's ultra-long-term government bond yields have risen to decades-highs, reflecting investor concerns over expansionary spending and monetary policy normalization.