Japan approves additional $3.9 billion in subsidies for semiconductor firm Rapidus to meet chip goals

Japan said Tuesday it has approved up to 590 billion yen ($3.89 billion) in additional subsidies for chipmaker Rapidus Corporation, as the country plays catch up with other nations on semiconductor manufacturing.

The latest round of support will include up to 53.5 billion yen for research and development of back-end processes such as chip packaging, according to a press briefing by Japan’s Ministry of Economy, Trade and Industry on Tuesday.

Rapidus Corporation was founded in 2022 by the Japanese government and eight domestic companies to develop and manufacture advanced semiconductors. Toyota Motor Corporation, Sony Group are among the companies that have invested billions of yen in Rapidus.

Rapidus has received 330 billion yen from the Japanese government between 2022 and 2023 to mass produce 2-nanometer chips in Chitose, Hokkaido, from 2027.

It will compete with industry leaders Taiwan Semiconductor Manufacturing Company and South Korea’s Samsung Electronics, which plan to start mass production of 2-nanometer chips by 2025.

TSMC and Samsung currently produce 3-nanometer chips, while Rapidus is currently constructing an advanced semiconductor plant in Chitose.

Typically, a reduction in nanometer size can yield more powerful and efficient chips with more transistors packed onto a single semiconductor.

Rapidus said in April 2023 its workers had begun research and development in collaboration with IBM.

Japan has been striving to reclaim its position as a semiconductor powerhouse, which it lost to countries such as Taiwan and South Korea.

“Japan occupied more than half of the global semiconductor market in the 1980s, but other countries have been leading in this industry ever since. While plants in other parts of the world are currently mass producing 3-nm chips, the most advanced generation produced in Japan now is the 40-nm chip,” the Japanese government said in a report last month.

In recent years, the Japanese government has extended significant investment support to attract both domestic and foreign semiconductor companies such as TSMC, Samsung and Micron.

TSMC most recently opened its first chip plant in Japan in February with support from the Japanese government as it diversifies supply chains away from Taiwan amid intensifying U.S.-China trade tensions.

Micron also announced in May 2023 that it will be the first semiconductor company to bring extreme ultraviolet technology to Japan to manufacture its next generation of dynamic random access memory chips at its Hiroshima plant.