Japan minister vows aid for Rapidus in push for advanced chips

Japan’s trade minister pledged the government will hike its financial support for chipmaker Rapidus Corp. as it works to develop cutting-edge semiconductors, arguing domestic production of such components is essential for the country to excel in artificial intelligence and autonomous driving. 

“I have high hopes that Rapidus can mass produce 2-nanometer chips and beyond in Japan, and the government is ready to continue and beef up financial support to the company as it will need to spend trillions of yen to make that happen,” Yasutoshi Nishimura, minister of economy, trade and industry, said in an interview.

Tetsuro Higashi, former chairman of Tokyo Electron Ltd., and Atsuyoshi Koike, former president of Western Digital Corp., established Tokyo-based Rapidus last year with the goal of making the cutting-edge, two-nanometer chips in Japan by 2025. The duo drew investment from companies including Toyota Motor Corp., Sony Group Corp. and Nippon Telegraph & Telephone Corp. 

The project is seen as a quasi-public sector effort, with Rapidus becoming a potential national champion as the country tries to develop a strong local chip sector. The government contributed ¥70 billion ($530 million) in financial aid for its launch.

Japan’s efforts come as countries around the world are seeking to build their own semiconductor capabilities, a strategic priority after the Covid pandemic shut down global commerce and as the US-China conflict threatens the old standards of free trade. The US, China, South Korea and Europe are all pouring billions into the sector to secure supplies.

Japan was once a semiconductor superpower with a dominant share of the memory chip market, but it ceded that position in part because of its own clash with the US over what constituted fair industrial policy. Former trade minister Akira Amari told Bloomberg in January that Japan lost its edge because individual companies made development choices independently and the government failed to work well with the US administration of the time.

Some analysts are skeptical that Rapidus can achieve 2-nm production in such a short period of time, considering it’s more advanced than what leaders like Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. offer now. They also question whether Japan will have many buyers for such chips; the country’s biggest industries, including automaking, use mostly older, less advanced chips.

“Unfortunately, Japan isn’t a home of companies like Apple Inc. that would use a lot of newest chips today,” Nishimura said in the interview. “But cutting-edge chips will be a key for a wide range of industries within next five to ten years, such as autonomous driving, ChatGPT-like AI services, as well as quantum computing.”

The 60-year-old said the government will monitor Rapidus’s progress with a plan to “provide continued, bigger support” if necessary. Rapidus has international support: It is working with International Business Machines Corp. of the US and Interuniversity Microelectronics Centre of Belgium on its production plans.

“I want to see Japan once again make top-notch chips domestically,” Nishimura said. “There are already a lot of Japanese firms that have long been providing the world’s top-class chip production machinery and materials.”