Japan Injects $5 Billion into Semiconductor Venture Rapidus

Japan announced on Monday that it will inject an additional $5.4 billion into the semiconductor venture Rapidus, which aims to mass-produce next-generation chips in the country from 2027. The industry ministry stated that the funding would bring total government assistance to Rapidus to 1.7 trillion yen. The joint venture, involving Sony, Toyota, IBM, and others, is set to begin test production at its Hokkaido factory in April.

Global demand for advanced, energy-efficient semiconductors is expected to surge as artificial intelligence technologies become increasingly integrated into daily life. Securing stable supplies of chips has become both a business and national security priority for Japan, which once dominated the global hardware industry in the 1980s.

Rapidus aims to mass-produce logic chips using two-nanometre technology, the next frontier in semiconductors. These chips contain an unprecedented number of minuscule transistors, making them highly advanced and efficient. Japan once commanded half the global microchip market in the 1980s and early 1990s, led by companies such as NEC and Toshiba. However, its market share has since dropped to about 10 percent, although it remains a leader in chip-making equipment and materials.

Rapidus chairman Tetsuro Higashi told AFP in an interview last year that the project represented Japan’s “last opportunity” to revive its semiconductor sector on the global stage. “Japan is more than a decade behind others. It will require enormous money just to catch up,” he said, underscoring the urgency of the initiative.

Semiconductors, which power everything from mobile phones to cars, have become a key battleground in global trade. Meanwhile, Taiwanese chip giant TSMC is under pressure to diversify its production amid concerns about the possibility of a Chinese invasion of Taiwan.

In response, TSMC opened an $8.6 billion factory in southern Japan last year and is planning a second, $20 billion facility for more advanced chips. These developments highlight Japan’s strategic push to strengthen its semiconductor industry and reduce reliance on foreign suppliers.