Japan is intensifying efforts to strengthen its domestic semiconductor industry, especially with the ambitious goal of mass-producing 2nm chips by 2027. To support this, the Japanese government is preparing a significant boost to its semiconductor and AI sectors, with plans to allocate 1.6 trillion yen in the upcoming supplementary budget. A portion of this, 800 billion yen ($5.27 billion), will be directed toward Rapidus, the domestic wafer foundry focused on next-generation chip production.

Rapidus, which aims to begin mass production of 2nm chips by 2027, requires an estimated 5 trillion yen to achieve its objectives. Previously, the Japanese government committed 920 billion yen in subsidies to the company, but there remains a funding gap of approximately 4 trillion yen. The additional funds from the supplementary budget will be used to cover research and development costs as well as operational expenses.

The company’s first plant, located in Chitose City, Hokkaido, broke ground in September 2023, with test production slated for April 2025 and full-scale production targeted for 2027. In addition, the Ministry of Economy, Trade, and Industry (METI) plans to invest 200 billion yen in 2025 to further support the project.

Unlike subsidies, this investment would allow the government to have a stronger governance role as an equity stakeholder, providing more influence over the company’s operations. METI’s proposal also includes the possibility of “physical contributions” by 2027, where government-funded assets such as factories and equipment could be exchanged for Rapidus stock, further cementing the state’s involvement in the company.

Founded in August 2022, Rapidus is a consortium of eight major Japanese companies, including Toyota, Sony, NTT, NEC, SoftBank, Denso, Kioxia, and Mitsubishi UFJ. These companies collectively aim to position Japan as a leader in semiconductor manufacturing once again, with Rapidus set to play a pivotal role in meeting the country's advanced chip production needs.

Rapidus' plant will be fully automated, incorporating robots and AI to enhance production efficiency. This cutting-edge facility will offer a significant competitive advantage by reducing production times—allowing the company to deliver chips in one-third of the time compared to competitors. The plant's external structure is expected to be completed by October 2024, with EUV (extreme ultraviolet) lithography equipment arriving by December.

This highly automated approach is a marked shift from traditional semiconductor factories, where later-stage processes like interconnect, packaging, and testing remain labor-intensive. CEO Atsuyoshi Koike has emphasized that this will enable Rapidus to achieve higher performance and faster delivery times for 2nm chips compared to other players in the market.

With the Japanese government’s continued financial support, Rapidus is poised to become a key player in the global semiconductor industry, playing a central role in Japan's strategic push to regain its leadership in advanced semiconductor manufacturing.