Japan backs Rapidus with $4B

Japan just approved another 631.5 billion yen, about $4 billion, for Rapidus, a three-year-old chip company that is trying to do in Hokkaido what only a handful of factories on Earth can do: make the most advanced logic chips. (Reuters: ) This is not Japan rescuing an old national champion. Rapidus was created in August 2022 by eight Japanese companies, including Toyota, Sony, SoftBank, NTT, NEC, Denso, Kioxia, and MUFG Bank, to rebuild a domestic advanced chip industry from near zero. (Rapidus: ) The target is a 2-nanometer chip by 2027. In chipmaking, “2 nanometer” is the industry label for a leading-edge process, the kind used for the processors that train and run artificial intelligence systems in data centers and high-end devices. (Rapidus: ) (IBM: ) Japan is paying because a modern chip factory is less like a normal plant and more like a city-sized science experiment. One extreme ultraviolet lithography machine alone can cost hundreds of millions of dollars, and getting yields high enough for mass production can take years. (ASML: ) (TSMC Annual Report: ) Rapidus is not building this from scratch by itself. It licensed 2-nanometer technology from IBM, joined Belgium’s imec research program for process development, and expanded its work with IBM in 2024 to include chiplet packaging, which is the method of linking several small chips together inside one package. (IBM: ) (imec: ) The factory is in Chitose, on Japan’s northern island of Hokkaido, and Rapidus calls the site Innovative Integration for Manufacturing 1. The company says the pilot line is already operating there, which means it has moved from drawings and subsidies to actual tools, clean rooms, and test wafers. (Rapidus: ) The new money is aimed at speeding research and development and prototype work for customers, including a project tied to Fujitsu. Reuters reported that the latest approval lifts Rapidus’s total research-and-development assistance to about 2.354 trillion yen, while Jiji said cumulative state support since fiscal 2022 will total up to 2.454 trillion yen, a gap that appears to reflect different ways of counting approved programs. (Reuters: ) (Jiji Press: ) That scale tells you what Tokyo thinks the risk is. Japan still makes crucial chip materials and equipment, but the actual business of manufacturing the world’s most advanced logic chips is dominated by Taiwan Semiconductor Manufacturing Company and Samsung, with Intel trying to catch up. (TSMC: ) (Samsung: ) (Intel: ) Japan has been moving on several fronts at once. Taiwan Semiconductor Manufacturing Company is building capacity in Kumamoto with strong Japanese support, while Rapidus is the separate bet that Japan should also own a homegrown leading-edge foundry instead of relying only on foreign partners. (JASM: ) (Rapidus: ) The hard part starts now. Turning a pilot line into profitable mass production by 2027 means Rapidus has to prove it can make enough good chips per wafer, win real customers, and raise large amounts of private money on top of state aid. (Bloomberg: ) (Rapidus: ) If Rapidus works, Japan gets something it has not had for decades: domestic control over a top-tier logic process at the exact moment artificial intelligence is making advanced chips the new oil refinery of the digital economy. If it fails, Japan will have spent trillions of yen to relearn one of the hardest manufacturing skills in the world. (Reuters: ) (Rapidus: )