Semiconductor Equipment

Japan to infuse nearly $4 billion into foundry venture

03 April 2024

Continuing its strategy to rebuild its domestic semiconductor manufacturing, Japan has approved $3.9 billion in subsidies for chip foundry venture Rapidus.

The move comes just a few months after foundry leader Taiwan Semiconductor Manufacturing Co. (TSMC) opened its first Japanese fab in the Kumamoto Prefecture. The TSMC fab will also receive Japanese government subsidies and is a collaboration with Japanese-based companies Toyota Motor Corp., Denso Corp. and Sony Semiconductor.

TSMC’s fab, called Japan Advanced Semiconductor Manufacturing Inc. (JASM), attracted numerous other companies to set up shop in the Kumamoto region. The goal is to not just take advantage of numerous new jobs opening but an infusion of engineers coming to the region to work.

Rapidus is targeting mass production of semiconductors on the northern island of Hokkaido from 2027. The foundry is looking to manufacture chips with a 2 nm process by 2027 and is supported by eight Japanese companies including Denso, Kioxia, NEC, NTT, MUFG Bank, Sony, Toyota and SoftBank

Why it matters

The rise in regional semiconductor manufacturing is growing globally after the COVID-19 pandemic, trade tensions and other geopolitical issues caused governments, companies and organizations to realize the flaws of an aggregated chip supply chain in Asia.

The U.S. and European Union have been very aggressive with their subsidy support to bolster chipmaking regionally with the CHIPS and Science Act and European Chips Act, respectively. The U.S. has set goals to manufacture at least one-third of all chips globally and the E.U. is looking to garner 20% of the world’s chip market by 2030.

Japan has also been bolstering its own regional manufacturing with subsides to TSMC, Rapidus and other companies to expand its own control over chip supply chains.

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