Billions of dollars are being poured into the creation of a state-of-the-art chip manufacturing facility Hokkaido, Japan, signaling Japan’s ambitious endeavor to revitalize its semiconductor industry.
Amid escalating tensions between the United States and China, Japan sees an opportunity not only to reclaim its position in the global semiconductor market but also to secure its economic future.
In Hokkaido, where the scenery is typically dominated by farming and military bases, a new chapter is being written. Rapidus Corp., an 18-month-old venture, is gearing up to mass-produce cutting-edge 2-nanometer logic chips by 2027. This bold initiative, considered implausible by industry standards, reflects Japan’s determination to reassert its dominance in semiconductor production.
“At Rapidus, we believe in pushing boundaries and driving innovation,” says Atsuo Shimizu, a Rapidus executive. “Our goal is not just to compete but to lead the way in semiconductor technology, ensuring Japan’s position as a global player.”
Recognizing the strategic importance of semiconductor production, the Japanese government has allocated substantial funds (about $67bn) to bolster the industry. Prime Minister Fumio Kishida has earmarked trillions of yen for revitalizing semiconductor manufacturing, to triple domestically produced chip sales by 2030.
The government has pledged ¥330 billion and allocated an additional ¥646 billion from a fund to support the Rapidus project. This funding is expected to cover half of the initial ¥2 trillion investment. However, the private company has not disclosed its plan for raising the remaining funds or the additional ¥3 trillion needed to expand operations after the foundry’s launch.
In contrast to the substantial government support, the response from corporate Japan has been tepid. Major companies like Toyota Motor Corp. have only pledged ¥7.3 billion for the venture thus far.
Kazumi Nishikawa, principal director of economic security policy at Japan’s Ministry of Economy, Trade and Industry, notes the urgency of this initiative: “The US-China confrontation underscores the need for Japan to secure its semiconductor supply chain. Our investments aim to strengthen our technological sovereignty and ensure economic resilience.”
Japan’s strategy involves collaboration with international partners, including the United States. As part of the Rapidus project, IBM Corp. is training Japanese engineers to enhance their expertise in chip manufacturing. US Ambassador to Japan Rahm Emanuel emphasizes the importance of this partnership: “By working together, we can address common challenges and ensure the security and prosperity of both our nations.”
The Challenges and Opportunities
While Japan’s semiconductor ambitions are ambitious, they are not without challenges. The success of projects like Rapidus hinges on technological advancements and market demand. Shigeru Fujii, former chipmaking executive at Fujitsu Ltd., expresses skepticism: “While the goals are commendable, the execution will be challenging. It remains to be seen whether Rapidus can effectively compete in the global market.”
Despite IBM’s efforts to train engineers for the company, Rapidus is expected to face challenges in hiring the approximately 1,000 engineers and workers required to launch the foundry, according to experts. Japan’s chip sector experienced a significant decline, losing around 30% of its jobs over the two decades leading up to 2019, while its share of the global chipmaking market dropped from over 50% to less than 10%. This situation has resulted in a shortage of at least 40,000 workers over the next decade due to population declines, according to METI.
However, Rapidus remains undeterred. Atsuo Shimizu asserts the company’s commitment to carving out a niche in the market: “We are confident in our technology and our team. With the support of the government and our partners, we believe we can succeed.”
Government Subsidies and Concerns
Despite government support, concerns linger regarding the feasibility of Japan’s semiconductor revival. The shortage of skilled workers and the uncertainty surrounding the success of ambitious projects raise doubts about the efficacy of Japan’s strategy.
Takashi Yunogami, a former engineer, compares Rapidus’s goals to a baseball player aiming to become a superstar overnight: “While ambition is important, it must be tempered with realistic expectations. Building a competitive semiconductor industry will require sustained effort and investment.”
Japan’s push to boost domestic chip production signifies a pivotal moment in the nation’s economic trajectory. As geopolitical tensions intensify and global supply chains face unprecedented challenges, Japan is determined to secure its position in the semiconductor market once again.
While the road ahead is fraught with obstacles, Japan is showing unwavering commitment to technological innovation. Whether this ambitious endeavor will bear fruit remains to be seen, but one thing is certain: Japan is ready to reclaim its status as a powerhouse in semiconductor manufacturing.
Japan’s substantial subsidies signal a renewed determination within the trade and industry ministry to capitalize on a window of opportunity to regain some of the nation’s chip prowess. Bloomberg analysis notes that these subsidies also underscore the perspective that in an environment growing more adversarial, it is preferable to invest in chip technology rather than to lack any contingency plan at all.
“Chips are used for drones, fighters, submarines and missiles,” said the LDP’s Seki. “If we can make others feel Japan can halt chip exports if they mess with us, that will mean our investment has served as a war deterrent, too.”
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