Japan invests $500 million to revive chip manufacturing, pointing to 2nm

The 1980s was the golden age of Japanese semiconductor manufacturing, and in 1988, Japanese semiconductor products accounted for nearly half of the world's total output. But in 1986 and the United States signed the "U.S.-Japan Semiconductor Agreement" has become an important inflection point for the Japanese semiconductor industry to fall from grace. Since then, the semiconductor manufacturing industry has gradually formed a three-pronged pattern of the United States, South Korea and Taiwan.

However, in recent years, Japan has been moving frequently, hoping to recover the lost three decades. The latest move so far is the announcement on November 11, 2022 to invest 70 billion yen (about $500 million) in a newly established semiconductor company, Rapidus. The company is a joint venture between eight Japanese companies, including Toyota, Sony, NTT, Softbank, Armor Man, Denso, NEC and Mitsubishi UFJ Bank.

Rapidus, which is Latin for "fast," represents the company's intention to speed up the chip production process, with the goal of producing next-generation semiconductors in Japan starting in 2027. The Japanese government has allocated 70 billion yen to support a project with IBM to develop 2nm chips.

Japanese Minister of Economy, Trade and Industry Minoru Nishimura stressed that the semiconductor is a key technology that can bring significant innovation in the field of quantum and artificial intelligence technologies, and play a role in the digitization and decarbonization of Japanese society.

He said, "By collaborating with overseas research institutions and industry, especially in the United States, we hope to strengthen the foundation of Japan's semiconductor industry and its competitiveness through the joint efforts of academia and industry."

Nishimura said that the Japanese government will also establish an organization called the New Frontier Semiconductor Technology Center by the end of this year to serve as a platform for next-generation semiconductor research and development in cooperation with the United States. Among them, the cooperation with IBM will be an important part.

IBM claimed last year to be the first company in the world to demonstrate a 2nm chip, and before that the first to demonstrate 5nm and 7nm wafers, although the Blue Giant itself does not mass produce these chips. Through the partnership, Rapidus will use the 2-nanometer manufacturing process already created by IBM.

Rapidus may reportedly try a new business approach that involves owning and developing its own processes but using partners to plan, build and own capital-intensive operations such as fabs. One or more fabs could be built on the basis of a joint venture between a U.S. and Japanese company or a Japanese company working independently.

Japan's initiatives are not limited to this. Previously, in order to revive the chip manufacturing industry, the Japanese government provided financial assistance to encourage foreign chip makers to build factories in Japan. Last year, Japan contributed 400 billion yen to support TSMC, the world's leading logic chip maker, to build a factory in Kumamoto Prefecture to supply semiconductors to Sony and auto parts maker Denso.

In July, Japan also provided 93 billion yen in subsidies to help memory chip makers Armor Man and Western Digital expand production in Japan. in September, it pledged 46.5 billion yen to U.S. chip maker Micron Technology to increase production capacity at its Hiroshima plant.

A document released by Japan's Ministry of Economy, Trade and Industry said Japan is a decade behind in the race to develop next-generation chips, saying it is the "last chance" to compete globally.

Reference Links：

https://www.reuters.com/technology/japan-invest-up-500-mln-new-advanced-chip-development-company-2022-11-11/