A new semiconductor consortium in Japan

The Japanese government has promoted the creation of a public-private consortium to produce the latest generation of semiconductors in Japan. It has promised to inject 70 billion yen (483 million euros), while a dozen private companies including Sony, Toyota, SoftBank Group and NTT (Nippon Telegraph and Telephone) are expected to invest one billion yen each (6.9 million euros). Other Japanese companies involved include Kioxia, Denso, and Mitsubishi UFJ Financial Group.
The new company backed by this consortium is called Rapidus. It is engaged in both research and development and manufacturing of next-generation 2-nanometer and sub-2-nanometer semiconductors in this highly capital-intensive sector. “Semiconductors will be an essential part of the development of new advanced technologies such as artificial intelligence, digital industries and healthcare,” said Minister of Economy, Trade and Industry Yasutoshi Nishimura on 11 November when announcing the establishment of Rapidus. The Japanese government thus wants to ensure its technological independence, as for the moment the latest generation of semiconductors are imported from Taiwan. Since the Chinese military manoeuvres around Taiwan last August, governments and industrialists have become aware of their vulnerability with regard to a source of supply, Taiwan, which is perceived as risky today. Many microelectronics players are developing geographical and industrial repositioning strategies. And Japan is no exception.

First semiconductors in 2027

Rapidus, the new Japanese company, will focus on semiconductors used by, among others, software containing artificial intelligence. The production of 2-nanometer semiconductors is planned for 2027. Rapidus will eventually compete with Taiwan’s world number one TSMC and South Korea’s Samsung Electronics, which started production of 3-nanometer semiconductors in 2022 and are due to switch to 2-nanometer models in 2025.
“In five years, we will have state-of-the-art foundry operations in Japan,” according to Atsuyoshi Koike, who is the president of Rapidus. He previously headed memory chip maker Western Digital Japan. He is leading the project with Tetsuro Higashi, the former president of electronics supplier Tokyo Electron.
Rapidus plans a total investment of the equivalent of $36 billion in spending over 10 years. The consortium’s member companies plan to invest a total of 7.3 billion yen, with the government offering 70 billion yen in subsidies.

Strengthening Japanese economic security

Japan has decided to make semiconductors a key element of its economic security alongside the US. The Japanese government is taking a leading role in promoting domestic production. As early as May 2021, the ruling Liberal Democratic Party established a parliamentary group to study semiconductor strategies. The Ministry of Economy, Trade and Industry joined this initiative and decided on the new strategy in June 2021. One of the first results was that TSMC was encouraged to build a factory in Japan.

TSMC’s arrival in Japan

In 2024, TSMC will open a new factory in the Japanese prefecture of Kumamoto. Since the announcement of TSMC’s arrival in Japan, 14 projects for the construction or expansion of new semiconductor facilities in the prefecture have been announced. Half of these projects involve companies specialising in semiconductor manufacturing equipment. Japan has a share of about 30% of the semiconductor equipment market, which puts the sector in a relatively better competitive position than the Japanese semiconductor industry as a whole.

New ecosystem in microelectronics

The Japanese government’s supportive policy will enable the formation of a dedicated semiconductor ecosystem. Other microelectronics equipment manufacturers are encouraged to invest in their production capacities as well. They will be able to deliver the necessary semiconductor production machinery to Rapidus in order to meet the 2027 deadline and see the first Japanese semiconductors of the 2020s.