Photo/Illutration Kioxia Holdings Corp.’s semiconductor factory in Yokkaichi, Mie Prefecture (Provided by Kioxia Holdings Corp.)

The government will provide up to 92.9 billion yen ($678 million) in subsidies to major semiconductor manufacturer Kioxia Corp. and U.S. chipmaker Western Digital Corp. for their new production facility in Japan.

“We concluded that it will help ensure a stable production of semiconductors,” economy minister Koichi Hagiuda said at a news conference on July 26.

The economy ministry announced the same day that it approved an application for subsidies the two companies’ joint venture firms submitted for their manufacturing facility being built at Kioxia’s Yokkaichi Plant in Yokkaichi, Mie Prefecture.

Nobuo Hayasaka, president and CEO of Kioxia, said in a statement that his company will continue its stable domestic production of “cutting-edge flash memory,” which he said is key to ensuring economic security.

He added that Kioxia is “committed to further advancing the semiconductor industry and contributing to the development of the domestic and global economies.”

The government will subsidize one-third of the 278.8 billion yen to be spent on the project to help the companies with the mass production of 3-D flash memory for use in smartphones and personal computers.

The state-of-the-art semiconductor is said to have twice as much capacity and a higher processing speed than existing chips.

The firms plan to start shipments in February 2023.

They became the second beneficiary to receive a large grant from the government’s 617 billion yen fund set up to help boost the domestic production of cutting-edge semiconductors amid a global chip shortage.

The government decided in June to provide a subsidy of up to 476 billion yen to Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of semiconductors, and its Japanese joint venture partners for their new plant in Kumamoto Prefecture.

That means the government will spend more than 90 percent of the fund on the two projects.

Manufacturers are fiercely competing to win a larger share in the global advanced semiconductor market.

Kioxia is also constructing a new building at its Kitakami factory in Kitakami, Iwate Prefecture, to produce NAND flash memory, in which the firm holds the second-largest global market share.

Through its partnership with Western Digital, Kioxia is aiming to overtake Samsung Electronics Co., a leading South Korean information technology firm, which enjoys the largest global market share in NAND flash memory.

(This article was written by Takumi Wakai and Shimpei Doi.)

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