Japan approves additional €3,6 billion in subsidies for chip firm Rapidus, to meet semiconductor goals

On Tuesday, the Japanese government unveiled plans for a 3.6 billion investment to support Rapidus, a Japanese company, in local production of the next generation of semiconductors.

This move represents crucial support for Japan’s efforts to develop its strategic semiconductor sector.

“The Rapidus project is extremely important as it involves next-generation semiconductors that can influence the competitiveness of the Japanese industry as a whole,” said Hidemichi Shimizu, an official from the Ministry of Economy, to the press.

This new injection of up to ¥590 billion (equivalent to €3.6 billion) adds to the previously announced ¥330 billion by the Japanese government for Rapidus, a public-private consortium associated with the American company IBM. Construction of the first Rapidus factory began last September on Hokkaido Island in northern Japan. Founded in 2022, the Japanese company, which also involves major private groups such as Toyota and Sony, aims to support Japan’s goal of revitalizing its semiconductor industry through massive investments.

The Japanese government intends to invest up to ¥4 trillion (approximately €25 billion) over the next three years, with the aim of tripling sales of “made in Japan” chips by 2030 to over ¥15 trillion (over €90 billion) annually. Tokyo hopes to accelerate research and development activities and the production of next-generation semiconductors in Japan, which lags behind its Taiwanese and South Korean neighbors in this field.

As part of this strategy, Japan inaugurated in February its first factory on its territory by the Taiwanese semiconductor giant, TSMC, an installation that cost the equivalent of €8 billion and received over 40% subsidy from the Japanese government.

Additionally, TSMC recently confirmed plans to build a second mega-factory in Japan, with substantial financial support from Tokyo and Japanese private companies such as Sony and Toyota. The Taiwanese company is also considering building a third or even a fourth giant factory in Japan in the long term, according to media reports.

TSMC, whose clients include giants like Apple and Nvidia, controls over half of the world’s chip production, used in all domains, from smartphones and connected cars to rockets and artificial intelligence (AI).

Other Japanese and American chip manufacturers receive generous subsidies from Tokyo to develop their technologies.