The Japanese government has invested heavily in supporting Rapidus.
The Japanese government has invested heavily in supporting Rapidus's development of 2-nanometer advanced chips. Whether it can successfully mass-produce them and acquire major customers will be the key to the success or failure of the project.

TAIPEI — Japan is investing about US$15 billion in Rapidus, a domestic semiconductor startup tasked with rebuilding the country’s advanced chipmaking capabilities. But the success of the massive investment will ultimately depend on whether the company can secure enough customer orders.

Reuters reported that the Japanese government and companies are strongly backing Rapidus in hopes of restoring Japan’s position as a major global hub for advanced semiconductor manufacturing. Rapidus is focusing on 2nm process technology and plans to establish large-scale production capacity.

For Japan, Rapidus is more than a business venture. It is also viewed as a national strategy to strengthen economic security and reduce reliance on overseas chipmakers. (reuters.com)

Japan’s semiconductor industry once held a major share of the global market, but it has gradually fallen behind companies in Taiwan, South Korea and the United States in advanced logic-chip manufacturing. As artificial intelligence (AI) continues to expand, governments around the world have once again begun treating semiconductors as a strategic industry central to national and economic security.

Rapidus is seeking to capitalize on the global restructuring of the semiconductor industry by establishing an advanced chip production base in Hokkaido.

However, advanced processes require enormous capital investment, and foundries need sufficient orders to keep expensive production equipment operating at high utilization rates.

One of Rapidus’ biggest challenges is persuading major technology companies around the world to use its chipmaking services.

The global advanced foundry market is currently dominated by TSMC. Years of mass-production experience, a broad customer base and a comprehensive supply chain have given the company a powerful competitive advantage in advanced processes.

To challenge the existing market structure, Rapidus must not only demonstrate that its 2nm technology can meet customer requirements, but also prove that it can produce chips consistently, at scale and at competitive costs.

For chip designers, switching foundry suppliers means repeating process validation, making design adjustments and conducting production tests. Customers therefore do not typically change their primary suppliers easily.

This makes winning customers one of the most important factors in the entire Rapidus project.

The Japanese government believes that building domestic advanced chipmaking capabilities has long-term strategic value. Global semiconductor supply chains have been disrupted in recent years by US-China competition, the COVID-19 pandemic, geopolitics and export controls, prompting countries to seek greater self-sufficiency in critical chip supplies.

Japan hopes to use Rapidus to develop advanced process capabilities, reduce its reliance on Taiwan and other overseas suppliers, and attract more semiconductor design and related companies to invest in the country.

Rapidus’ development is also closely tied to Japan’s broader semiconductor policy. In recent years, the Japanese government has provided subsidies for a range of semiconductor projects in an effort to attract TSMC, Samsung and other international companies to expand their investments in Japan.

Rapidus’ rise is worth watching in Taiwan. If Japan succeeds in establishing advanced process mass production, it could eventually become a competitor to TSMC in parts of the advanced-process market.

In the short term, however, TSMC retains a clear advantage. Advanced processes require not only equipment and technology, but also years of accumulated manufacturing experience, yield-management expertise and a large customer ecosystem.

As a result, considerable uncertainty remains over whether Rapidus can become a major global advanced foundry.

Japan also has a powerful semiconductor equipment and materials industry, including suppliers of photoresists, silicon wafers, specialty chemicals and process equipment. If Rapidus succeeds in establishing advanced-process capacity, it could further strengthen Japan’s domestic semiconductor supply chain.

Market observers say the key question for Rapidus over the next few years will not simply be whether it can complete construction of its fab, but whether it can turn its technology into a stable stream of commercial orders.

Without enough customers, the company could face low capacity utilization and high costs even if government funding enables it to complete construction of the wafer fab.

Conversely, if Rapidus secures long-term orders from major chip designers and proves that its 2nm process can deliver reliable mass production, Japan could regain a more important position in the global advanced semiconductor manufacturing landscape.

That means the real test of Rapidus’ roughly US$15 billion semiconductor gamble is only beginning. Its ability to win customers, improve yields and achieve mass production will determine whether Japan can return to the front line of global competition in advanced chip manufacturing.