Japan bets big on AI revival, but rural gains stay uneven

Mettis Global reported that Japan has announced a ¥102tr ($640bn) plan to position the country at the forefront of artificial intelligence and semiconductor production. Prime Minister Sanae Takaichi hopes the programme will carry economic growth beyond Tokyo and Osaka into regional economies, a shift earlier governments struggled to achieve. The plan follows years of state-backed chip spending, with aid flowing to Kioxia Holdings' NAND flash site in Kitakami, roughly 500 kilometres north of Tokyo.

Kioxia started operations at Kitakami in 2020 and opened a second site last year, now planning an extra ¥1.8tr ($11.3bn) for a third line, according to Bloomberg. Local officials say the company now plays a key role in the town's economy, with manufacturers reporting higher sales and restaurants drawing more visitors. Yet city hall manager Daisuke Okuyama cautioned that wider benefits have proven smaller than officials suggested, and pay for staff outside Kioxia and its suppliers has hardly changed.

Kioxia's stock has climbed by more than 2,000% in twelve months, briefly ranking as Japan's top-valued listed firm in June. Regional manufacturing hubs remain more cautious, while Nomura Securities' Kengo Tanahashi says Japan has been unable to fully benefit from the AI boom relative to other nations, a situation he finds frustrating. Officials forecast that chip funding will bring ¥443tr of economic spillovers by fiscal 2040.