Japan to invest over $67 billion in domestic semicon, other computer chip production, to take on Taiwan, China

In a move aimed at reinvigorating its semiconductor sector and safeguarding its economy against escalating US-China tensions, Japan is embarking on a multi-billion-dollar endeavour spearheaded by Prime Minister Fumio Kishida. The ambitious 4 trillion Yen or $27 billion investment aims not only to revive Japan’s chip-making capabilities but also to reorient its economy towards a positive growth trajectory, as envisioned by the government and central bank. In total, Japan will be investing over $67 billion in various semiconductor and other silicon chip ventures.

At the heart of this initiative lies Rapidus Corp., a new Japanese venture poised to revolutionize the chip industry. Despite being just 18 months old, Rapidus Corp. is ambitiously targeting mass production of state-of-the-art 2-nanometer logic chips by 2027, signalling a remarkable leap forward from ground zero. This endeavour is particularly significant as Japan strives to regain ground lost to overseas competitors in semiconductor production.

The endeavour underscores the critical importance of advanced chips, which serve as the backbone for numerous key technologies including artificial intelligence, weaponry, and electric vehicles. With much of the global chip production concentrated in Taiwan and South Korea, Japan’s move aims to mitigate potential risks posed by regional tensions.

Atsuo Shimizu, a Rapidus executive leading the venture, emphasizes the geopolitical and economic security factors at play, asserting Japan’s necessity to assert itself as a global technological leader. Prime Minister Kishida’s commitment to the semiconductor industry is palpable, with plans to triple domestically produced chip sales to over 15 trillion Yen by 2030.

Japan’s chip strategy unfolds on two fronts: enticing foreign industry giants to set up shop in Japan through substantial subsidies, and the ambitious Rapidus project in Hokkaido aimed at restoring Japan’s prominence in chip innovation. Kazumi Nishikawa, principal director of economic security policy at Japan’s Ministry of Economy, Trade and Industry, highlights the urgency of the situation, citing potential trillions of dollars in negative impacts should chip supplies from Taiwan be disrupted.

While some sceptics question the feasibility of Rapidus’s goals, likening them to a novice baseball player aspiring to become an overnight superstar, support from international partners such as IBM, Lam Research Corp., and Imec, along with agreements with Canadian entities, underscores the project’s momentum.

The initiative gains further significance in light of recent geopolitical events, with the importance of securing chip supplies and fortifying defence systems underscored by Russia’s invasion of Ukraine, North Korea’s missile launches, and China’s posture towards Taiwan. As Japan forges ahead with its semiconductor revival, it aims not only to bolster its economic resilience but also to assert its position as a formidable player in global technology markets, potentially serving as a deterrent against adversaries.

(With inputs from agencies)