Japan’s government is rolling out an exceptionally ambitious program to rebuild its semiconductor industry. On top of this, they are investing $27 billion from 2020 until early 2024. This strategic move aims to restore Japan’s former status as a global leader in semiconductor production, a position it held four decades ago when it manufactured more than half of the world’s semiconductors. Whether by structure or strategy, the current reality could not be more different—with Japan’s share plummeting to a little over 10% as of today.
Rapidus is at the forefront of this revitalization endeavor. The consortium has already gained impressive layers of government support, including approval for a $12 billion private-sector investment to construct a huge semiconductor plant in the northern Japanese city of Chitose on Hokkaido island. This new factory will become our production powerhouse. It will interact with its environment, being fully covered in grass to mesh with Hokkaido’s rolling, fertile hills.
The reason for selecting Hokkaido as the location for this factory is understandable. Local authorities claim it is less prone to seismic activity than other proposed locations across Japan. Hokkaido, which has long been famous for its tourism and agriculture, will soon be transformed into a center for cutting-edge semiconductor production.
The Japanese government admits that previous attempts to increase the semiconductor industry within Japan were unsuccessful. Subsidies continued at inadequate levels through the 1980s leading to a further deterioration of their competitive position. This go-around, the goal is a far wider ecosystem around semiconductor fabrication plants— or “fabs” as they’re called in the industry. Mr. Koike, one of the masterminds behind the Rapidus consortium, says their advantage is speed.
“TSMC leads the world, with Intel and Samsung close behind. Our edge is speed – we can produce and deliver chips three to four times faster than anyone else. That speed is what gives us an edge in the global semiconductor race,” – Mr Koike.
Rapidus is proud to report that it has already reached a number of notable milestones. The company dominated commercial production of its 2nm prototype chip at record speeds, both home and abroad. This progress puts Japan in a position to reclaim its competitive advantage on the semiconductor stage.
“We succeeded in manufacturing the 2nm prototype for the first time in Japan, and at an unprecedented speed in Japan and globally,” – Mr Koike.
The bigger plan touches on releasing a $65 billion agenda plan related to artificial intelligence (AI) and semiconductors by the end of 2024. This three-part initiative is designed to increase production, but more importantly, it’s meant to draw talent and expertise back into the industry. Today, Japan is dealing with a critical shortfall of semiconductor engineers, an estimated 40,000 personnel required over the next few years.
Despite these ambitious plans, challenges remain. A new report from the Asean+3 Macroeconomic Research Office uncovers a staggering shortfall. They project that we need about 5 trillion yen (almost $31.8 billion) to launch mass production at the new plant, but the necessary financing just isn’t materializing.
“We’d like to provide products from Japan once again – products that are powerful and with great new value,” – Mr Koike.
The national and local governments have come together to try and make this industry revival happen. For Mr. Koike, the most important change is in mentality, particularly when it comes to cooperation among the many different players in the semiconductor ecosystem.
“The national government and local government are united in supporting our industry to revive once again,” – Mr Koike.
The creation of Rapidus and its planned chip factory in Hokkaido indeed represents a new, potentially exciting chapter in Japan’s semiconductor story. The government’s 550 billion yen ($4.45 billion) investment signals a long-term commitment from the government to restore Japan to a dominant position in the global semiconductor industry.