Japan's Massive Investment in Semiconductor Industry
Japan is set to inject a significant amount of state funds to reclaim its position as a leading producer of cutting-edge semiconductors. The government plans to allocate an additional $3.4 billion over the next three years to Rapidus, which is currently developing 2-nanometer (nm) semiconductor production. This move demonstrates Japan's commitment to revitalizing its semiconductor industry, with the total government investment now reaching a substantial $55 billion.
According to reports by Jiji Press and Kyodo News on June 20, the Ministry of Economy, Trade, and Industry presented a plan to the Fiscal System Council of the Ministry of Finance for a $4 billion additional investment in Rapidus.
The Ministry of Economy, Trade, and Industry aims to invest $1.5 billion in 2027, $1.5 billion in 2028, and $1 billion in 2029. If the plan proceeds as scheduled, the Japanese government's cumulative investment in Rapidus will increase from $2.5 billion to $6.5 billion (approximately $55 billion).
Japan's Strategic Move: Revitalizing Semiconductor Manufacturing with Rapidus
Japan's government is positioning Rapidus as a key player in its ambitious plan to revive the country's advanced semiconductor manufacturing industry. Once a dominant force in the global memory semiconductor market, Japan has faced a decline in manufacturing competitiveness due to the rise of South Korean and Taiwanese companies. However, the nation is now making significant strides by attracting advanced semiconductor production facilities and nurturing domestic enterprises, solidifying its industrial foundation.
#### Collaborating with IBM: Aiming for 2-Nanometer Production by 2027
Rapidus, a Japanese advanced semiconductor foundry established in 2022, is leading the charge. In partnership with IBM, the company is developing 2-nanometer process technology, with plans to commence mass production at its Chitose factory in Hokkaido by the second half of 2027.
Last April, Rapidus activated its 2-nanometer test production line at the Chitose factory, followed by a successful demonstration of the next-generation Gate-All-Around (GAA) transistor in July. In December of the same year, the company released an initial version of the process design kit (PDK) required for its customers' semiconductor designs, indicating its steady progress towards commercialization.
Lafter's Financial Boost: Securing Private Investment and Strengthening Financial Foundation
Private investment continues to flow into Lafter's ambitious venture. In February of this year, Lafter secured a total of ¥16.76 billion in funding from 32 prominent companies, including Sony Group, SoftBank, NTT, Canon, and Fujitsu. Demonstrating strong support, the Japanese government also contributed a substantial ¥25 billion across two separate investments in February and June.
This latest round of funding serves a dual purpose, not only supporting Lafter's expansion plans but also strengthening its financial position to secure large-scale private loans. Lafter is currently in discussions with financial institutions to secure a ¥2 trillion loan for the expansion of its production facilities. The Ministry of Economy, Trade, and Industry (METI) has emphasized the need for Lafter to maintain a certain level of equity ratio to qualify for private financing.
METI has acknowledged the increased likelihood of Lafter generating profitable returns as its business progresses. Financial institutions have submitted non-binding letters of intent for the ¥2 trillion loan, and negotiations are underway to finalize the terms and execute the loan agreement.
The advanced foundry market is currently witnessing a fierce 2-nanometer process competition between TSMC and Samsung Electronics. While Japan boasts strengths in semiconductor materials and equipment, its capabilities in advanced logic semiconductor production are limited. If Lafter successfully achieves its planned mass production targets, Japan will gain a competitive edge in the advanced foundry market, rivaling South Korean and Taiwanese companies.
