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Chips and batteries: Japan to amp up supply chains with subsidies

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The Japanese government plans to set up a subsidy program to assist companies developing chips, large-capacity batteries and other key materials to ensure a steady supply of strategic products.

The move comes after U.S.-China trade tensions and the pandemic have exposed vulnerabilities in Japan’s supply chains. Its reliance on China for masks and other medical supplies has led to acute shortages, and the lack of homegrown vaccines for COVID-19 has delayed inoculating its population.

The U.S. and Europe are also building similar programs. But excessive protection of domestic companies could end up assisting weak businesses lacking a competitive edge. It could also run afoul of the World Trade Organization’s domestic-subsidy rules.

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