With Rapidus Support Act, Revive Japan's Industries

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Semiconductors are not just industrial products. They are also strategic materials vital to national security. With Rapidus Corporation very much in mind, the government has submitted related legislation to the Diet. Hopefully, with government assistance, the public and private sectors can steadily revive Japan's semiconductor industry by working together.

The foundry company Rapidus was established in 2022 with support from the Ministry of Economy, Trade and Industry (METI) and investment from eight private companies. The proposed law would provide ¥100 billion JPY ($675.5 million USD) to Rapidus. Moreover, it would establish a framework for ongoing financial support, including tax incentives and debt guarantees. We urge its swift adoption.

Securing Domestic Supply Chains

Many other nations, including the United States and China, have been moving to bolster their semiconductor industries with massive government support. We must also consider the possibility of a Taiwan emergency. Fostering domestic semiconductor manufacturers with global competitiveness and strengthening our supply chains would be highly significant for the Japanese economy.

With semiconductors, the narrower the circuit line width, the better the performance. Logic semiconductors, for example, act as the "brain" of a device, performing calculations and control functions. As things now stand, domestic manufacturers can only produce general-purpose logic semiconductors that are 40 nanometers in size. (A nanometer is one billionth of a meter.)

*The factory under construction by Rapidus, aiming to domestically produce next-generation semiconductors. May 2024, Chitose City, Hokkaido.*

Japan's semiconductor industry once held more than half of the global market share. Unfortunately, it has fallen behind in terms of technological innovation and lost its global competitiveness.

To turn things around, Rapidus is aiming to mass-produce cutting-edge semiconductors with circuit line widths of just 2 nanometers. For now, it expects to start mass production in 2027. Ahead of that, the company is slated to begin prototype production at its factory in Chitose, Hokkaido, this spring.

Attracting More Private Sector Funding

The government has already awarded Rapidus ¥920 billion ($6.2 billion ) in subsidies. To date, however, the company has not been able to secure sufficient funding from private companies. It needs ¥5 trillion ($33.8 billion ) to start mass production. Meanwhile, the government expressed its intention to continue providing support, which hopefully will, in turn, attract private sector funding.

The enormous assistance from the government has drawn some criticism. Nevertheless, failure to domestically produce competitive semiconductors would only result in a burden on the public. In this case, failure is unacceptable.

By supplying cutting-edge semiconductors with tailored applications for specific companies in mind, say, autonomous driving, Rapidus is expected to have a ripple effect on domestic industries. Nevertheless, to quickly transition to private sector leadership, it needs to demonstrate that the performance and quality of its prototypes can satisfy user companies.

Semiconductor manufacturing consumes enormous amounts of energy. For that reason, a stable supply of high-quality electricity is essential. Steady progress in restarting Hokkaido Electric Power's Tomari Nuclear Power Station Reactor No 3 will also be important if Rapidus is to succeed.