Japan backs Rapidus chips

Japan just put another ¥631.5 billion behind a chip startup that did not exist until August 2022, bringing development support for Rapidus to about ¥2.35 trillion as Tokyo tries to rebuild a domestic supply of advanced semiconductors. Rapidus is aiming at the hardest part of the chip business: logic chips made on a 2-nanometer process, the tiny switching brains used in servers, phones, and artificial intelligence systems. Its target is mass production in 2027 at its IIM-1 plant in Chitose, on Japan’s northern island of Hokkaido. That is a brutal timetable because the global leaders already doing this work are Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and Intel, and each one has spent decades learning how to make good chips at high volume. Rapidus is trying to compress that learning curve into about five years with state money and imported know-how. The company was built as a national consortium, with backing from Toyota, Sony, Nippon Telegraph and Telephone, SoftBank, Denso, Kioxia, NEC, and MUFG Bank. Japan is not betting on one founder with a slide deck; it is using its industrial old guard to try to recreate a missing part of the country’s manufacturing stack. Rapidus also did not start from scratch on the science. It signed a 2022 partnership with International Business Machines to develop 2-nanometer logic technology, then expanded that tie in 2024 to chiplet packaging, the method of connecting several small chips inside one package instead of building one giant slab of silicon. It also joined Belgium’s Interuniversity Microelectronics Centre, better known as imec, whose research programs are used by many of the world’s top chipmakers to test the next manufacturing steps before they reach factories. That gives Rapidus a shortcut to process research that would be painfully slow to build alone. Japan’s urgency comes from a long decline. Japanese companies once held about half of the global semiconductor market in the 1980s, but the country lost ground in advanced logic manufacturing while keeping strength in materials, equipment, and specialty components. The recent shock was that chips stopped looking like ordinary industrial parts and started looking like economic security assets. Pandemic shortages shut auto plants, United States-China export controls redrew supply chains, and artificial intelligence pushed demand toward the most advanced processors made by only a handful of overseas factories. So Tokyo is now spending at two levels at once. One track brings in outside manufacturers like Taiwan Semiconductor Manufacturing Company to make mature and specialty chips in Kumamoto, and the other tries to create a homegrown champion at the cutting edge with Rapidus. This new subsidy also sits inside a much larger plan. Prime Minister Shigeru Ishiba’s government has said Japan will provide more than ¥10 trillion in support for semiconductors and artificial intelligence by fiscal 2030, with the goal of pulling in far more private investment on top. The gamble is simple: if Rapidus reaches 2027 with a usable 2-nanometer production line, Japan gets a domestic foothold in the most strategic layer of computing. If it misses, Tokyo will have spent trillions of yen proving that making frontier chips is still one of the hardest manufacturing jobs on earth.