Japan allocates $5.4 billion aid to chip startup Rapidus amid global tensions

Japan is investing 802.5 billion yen ($5.4 billion) in Rapidus, a chip startup, aiming to reduce reliance on foreign chipmakers and enhance semiconductor production. The move comes amid rising tensions between the U.S. and China, emphasizing Japan’s focus on securing its chip supply chain

Japan is preparing to provide 802.5 billion yen ($5.4 billion) in additional aid to the semiconductor startup Rapidus, underlining Tokyo's determination to bolster its chip supply amidst escalating geopolitical tensions between the U.S. and China. This funding increases Japan's total commitment to the project to 1.72 trillion yen, including another proposed 100 billion yen. Japan’s Ministry of Economy, Trade, and Industry is also seeking debt guarantees to encourage private sector investment in the startup.

Most of the world's advanced logic chips, essential for artificial intelligence, are currently manufactured by Taiwan’s TSMC. This has sparked concerns over global reliance on Taiwan, especially as China claims the island as its own, further intensifying Japan's push to secure its semiconductor supply.

Rapidus, which has backing from major companies like Toyota, Sony, and SoftBank, is set to begin operating a test production line in April, with its first batch of wafers expected by the summer. The company is aiming to begin mass production of next-generation chips by 2027.

In recent years, Japan has committed approximately 5.4 trillion yen to regain its leadership in chip technology. While the country maintains a strong position in silicon wafer production and some chip materials, it has lost ground in the more profitable sectors of chip design and manufacturing, traditionally dominated by the U.S. and Taiwan.

Prime Minister Shigeru Ishiba has pledged additional public support for Japan's chip and AI sectors, with a bill for loan guarantees and government bond issuance linked to the Energy Special Account expected to be introduced in parliament. Japan's government is set to approve 333 billion yen in the upcoming fiscal year to further strengthen these industries.

Copied