TOKYO -- Wary of allowing the country's industry fall behind, the Japanese government is set to fund the development of semiconductors for artificial intelligence and other new technologies.

The country's Ministry of Economy, Trade and Industry sees it as imperative to nurture new areas of manufacturing to help shore up the country's economic growth.

The colossal sums involved in developing chips, even in their trial phase have meant the area has largely been dominated by Japan's biggest companies. Now the ministry plans to provide financial help to startups and researchers in the field by purchasing the necessary software and equipment.

The hope is to lay the ground work for the development of advanced technology and foster a strong pool of talent that can compete on the global stage.

As industry moves into the AI era, appropriate software and suitable chips will be crucial to the technology's ability to processes vast amounts of data. But AI also needs chips that can grasp overall trends in the data. Since the process is similar to 3-D image processing, graphics processing units made by U.S. company Nvidia are often the chip of choice in today's market.

The AI chip industry may still be in its early stages, but the competition is growing rapidly. Google and Intel are already developing the technology and Microsoft has recently joined the race.

Japan's industrial structure is undergoing a significant shift from manufacturing to services. In particular, AI and "internet of things" technology are expected to be adopted in numerous areas. But without low-cost, efficient chips that are suitable, the whole process may prove unsuccessful.

The ministry believes that, unlike the market for highly versatile conventional chips, global competition in terms of chips for AI and other new technologies is only just beginning. Japanese developers thus need state help, it has concluded.

Preferred Networks based in Tokyo is one of the startups vying to develop the new chips alongside the conglomerates, but it is a costly business.

Developers typically pay between 500 million yen to 1 billion yen ($4.55 million to $9.11 million) in licensing fees for the software needed to design chips. The testing equipment for the design then adds another 1 billion yen or so to the price tag. To actually create an original chip based on the design requires about 500 million yen and making a prototype costs another few hundred million yen.

At several billion yen, the process can be prohibitive.

Under the new program, the state will help lower the initial cost of investment by buying the necessary software and equipment for startups and researchers to use. The state-funded infrastructure will likely be available at the National Institute of Advanced Industrial Science and Technology, or AIST, other government-affiliated institutions or universities.

The ministry also plans to ask leading domestic chipmakers for support by providing expertise in the field.

Since around 2015, the Japanese government has tried to support AI studies through measures such as setting up research bases at the AIST and Riken, another government-affiliated research institute.

In the eyes of the ministry, the "next big race" has already started thanks to the spread of AI and IoT technologies. In cloud computing, for instance, Google and Amazon.com have already established a dominant position for themselves. But in autonomous driving, smart factories and other areas of data processing, there is still room for Japanese companies to force their way in.

To fund the program, the ministry plans to seek more than 10 billion yen from the fiscal 2018 budget, and will also finance basic studies of next-generation semiconductors.

(Nikkei)