The government is funneling increasing amounts of money into assistance for the semiconductor industry.

In particular, projects associated with next-generation semiconductors are being funded almost entirely by the government.

Limitless subsidization could not only distort the distribution of resources but also hamper self-reliance of businesses and the industry.

The government should set a clear path for transferring the initiative of similar measures to the private sector and carry out the transition.

In a package of economic measures approved by the Cabinet last month, the government spelled out, and not for the first time, measures for reinforcing Japan’s chipmaking industry.

It plans to invest, by the end of fiscal 2030, some 6 trillion yen ($40 billion) to subsidize the research and development of next-generation semiconductors and for other purposes, along with more than 4 trillion yen to finance, and guarantee liabilities related to, investments for the mass production of next-generation chips.

The government has earmarked 1.5 trillion yen for these objectives in the supplementary budget bill for the current fiscal year.

The industry reinforcement measures say a framework will be created for setting intermediate goals and examining the extent of their achievement under reviews by outside experts to “discuss, among other things, whether business programs should be approved or revised and whether assistance measures should be continued or not.”

It is all too natural that accountability should be fulfilled through objective reviews, given the unprecedentedly vast amount of money that will be spent.

Those reviews should not be self-serving ones that suit the convenience of the industry ministry, which plays the central role in the assistance measures.

The framework should be one that allows unrelenting decisions to be made, including to discontinue assistance as the occasion demands.

The financial resources for the assistance measures remain uncertain.

Officials have said they will tap into dividends from government-owned shares and repayments from funds into state coffers.

The assistance measures, however, assume that stopgap government bonds will be issued to finance them. They also bank on expenditure items that should normally be carried back into the general account.

Semiconductors are certainly indispensable commodities in a digital society. The government probably has more than a small role to play in the research and development of semiconductor chips, the development of industrial infrastructure for making them and the stabilization of their supply chains.

The government, however, should be cautious in intervening in specific domains, to say nothing of individual business projects.

Bureaucrats know little about the realities of industries, and they are not in a position to assume the responsibility for any mid- to long-term outcomes.

Intervention measures could also come under the pressure of politicians.

Properly speaking, private-sector businesses should be making their own decisions on whether investments should be made and thereby increase their earning power.

Many previous cases of the ministry’s industry assistance measures have ended in failure.

The latest policy measures include “economic security” among their stated goals, so the standards for assessing their success or failure could be left ambiguous.

We cannot but feel anxious, in particular, about the future of Rapidus Corp., which has set the goal of developing and mass-producing next-generation chips.

Officials have said that 5 trillion yen will be required to realize mass production. The government has already decided to provide a maximum of 920 billion yen in assistance to the project.

In comparison, eight private businesses, including Toyota Motor Corp. and Nippon Telegraph and Telephone Corp. (NTT), have invested a total of only 7.3 billion yen in Rapidus. They are considering additional investments, which, however, are expected, as things now stand, to be worth only about 100 billion yen.

The government is planning to submit, to the ordinary Diet session next year, legislation that would be required for providing assistance to Rapidus, including for guaranteeing liabilities.

Banks, however, are half-hearted about extending loans to the company.

Private-sector vitality is indispensable to success in the field of semiconductors, where there is a global, dog-eat-dog competition.

Government officials should not forget the public sector’s role and their role consists only in supplementing it.

--The Asahi Shimbun, Dec. 11