Rapidus Takes on 2nm: Japan’s Bold $32 Billion Chip Fab Ambitions

Rapidus is a joint venture established in 2022 by eight Japanese companies, including Sony, Toyota, NTT, Mitsubishi, NEC, Kioxia, and SoftBank, to achieve localized design and manufacturing of advanced semiconductor processes. Rapidus signed a technology licensing agreement with IBM in late 2022 and is constructing a new wafer fab in Chitose, Hokkaido, with plans to launch the production line in 2025, initially trial-producing 2nm chips and commencing mass production by 2027.

According to relevant media reports, the first phase of construction for Rapidus’s wafer fab in Hokkaido is expected to cost approximately 5 trillion yen (around $32.815 billion). After 2027, the project will enter its second phase, advancing the production process to the 1.4nm process node. To date, the Japanese government has provided subsidies amounting to 920 billion yen (around $6.038 billion) to Rapidus.

Despite Mitsubishi UFJ Financial Group, Japan’s largest bank, participating in Rapidus’s loan financing, other major Japanese banks remain hesitant to provide loans without government guarantees. Additionally, such large-scale loans are typically provided through bank syndicates, complicating Rapidus’s financing efforts. Some bank executives have privately expressed concerns about extending loans to Rapidus due to the lack of commitments from potential customers and the company’s inexperience with large-scale mass production, viewing the project financing as high risk.

The Japanese government, keen to promote the large-scale production of next-generation semiconductors, is considering the substantive content and timeline of the necessary legislation, aiming to submit a bill during the extraordinary Diet session this fall. This legislation is intended to support Rapidus in securing private-sector financing, streamline the loan process, and alleviate future operational financial pressures for the company.