Japan's Rapidus closes $1.7 billion funding round from government and 30 private companies to advance 2nm chip production, with plans to scale to 1nm nodes and engage 60+ potential customers.
Japan's state-backed semiconductor manufacturer Rapidus has secured ¥250 billion ($1.6 billion) in new funding from the Japanese government and 30 private-sector companies, marking a significant milestone in the country's push to regain semiconductor independence and compete in advanced chip manufacturing.
(Image credit: Getty / Yuichi Yamozaki)
The funding round includes major Japanese corporations such as Sony, Toyota, SoftBank, Canon, Fujitsu, Denso, Kioxia, and Seiko Epson, bringing Rapidus's total committed investment to approximately ¥1.7 trillion ($11 billion) toward its goal of 2nm mass production at the IIM-1 foundry in Chitose, Hokkaido.
Government Takes Strategic Stake with Control Provisions
The Japanese government's investment structure reveals Tokyo's strategic approach to securing semiconductor capabilities. Under the arrangement, the government will initially hold roughly 10% of Rapidus's voting shares while maintaining the majority of its stake in non-voting stock. However, the government retains the right to convert those shares to seize majority control if the company faces financial distress, according to Bloomberg reports.
Additionally, Japan's Ministry of Economy, Trade and Industry acquired "golden shares" granting veto power over major corporate decisions. Tomoshige Nambu, an official at the ministry, confirmed these provisions to reporters, emphasizing the government's commitment to ensuring the project's success.
Scaling Up National Semiconductor Investment
Japan's economy ministry is set to nearly quadruple its budgeted support for advanced semiconductors and AI development to approximately ¥1.23 trillion for the fiscal year starting in April. This represents a dramatic increase from previous years and signals Tokyo's determination to rebuild domestic semiconductor capabilities that have eroded over the past two decades.
Prime Minister Fumio Kishida's government is pursuing a multi-pronged strategy, having also recently secured a pledge from Taiwan Semiconductor Manufacturing Company (TSMC) to upgrade its technology and plants in Japan. This dual approach of supporting both Rapidus and TSMC demonstrates Japan's recognition that rebuilding semiconductor expertise requires multiple parallel efforts.
Technical Progress and Manufacturing Timeline
Rapidus has already achieved significant technical milestones. The company opened its pilot line in April 2025 and demonstrated working 2nm gate-all-around (GAA) transistors shortly after in July. The GAA architecture, which surrounds the transistor channel on all four sides rather than three, offers superior current control and reduced leakage compared to traditional FinFET designs.
The Hokkaido facility utilizes High-NA EUV lithography equipment from ASML, representing one of the most advanced manufacturing environments outside of TSMC's and Samsung's facilities. IBM has approximately 10 engineers stationed on-site as part of an ongoing technology transfer partnership, providing crucial expertise in advanced node development.
Production Plans and Scaling Strategy
Rapidus plans to start mass production at an initial rate of 6,000 12-inch wafers per month, scaling to approximately 25,000 within the first year. This phased approach allows the company to validate processes and build expertise before ramping to full production capacity.
The total investment needed to reach full production capability is estimated at around ¥4 trillion, with ¥1.7 trillion committed from all sources to date. This leaves a significant funding gap that Rapidus will need to address as it approaches its fiscal year 2027 target for 2nm mass production.
Strong Customer Interest and Future Roadmap
CEO Atsuyoshi Koike revealed at a press conference on February 26 that Rapidus is in active discussions with more than 60 companies looking to design chips for AI, robotics, and edge computing applications. "Since the start of the year, customers' demands for cutting-edge chips have surged," Koike stated, adding that interest in 2nm specifically had intensified.
Beyond 2nm production, Rapidus has ambitious plans to push to 1.4nm and 1nm nodes in subsequent generations. This aggressive roadmap positions Japan to potentially compete with leading-edge foundries in the late 2020s and early 2030s, though achieving these nodes will require continued technological advancement and substantial capital investment.
Strategic Implications for Global Semiconductor Supply Chain
The Rapidus initiative represents a significant shift in the global semiconductor landscape. For decades, Japan's semiconductor industry has declined from its 1980s dominance, with companies like Toshiba, NEC, and Hitachi gradually exiting chip manufacturing. Rapidus aims to reverse this trend by combining government support, private investment, and advanced technology partnerships.
The project's success could reduce Japan's dependence on foreign semiconductor suppliers and provide domestic companies with guaranteed access to cutting-edge chip production. This is particularly crucial for automotive, consumer electronics, and industrial sectors that require specialized semiconductor solutions.
Challenges and Timeline Pressures
Despite the strong backing and technical progress, Rapidus faces significant challenges. The semiconductor industry's capital requirements are enormous, and achieving yield maturity at advanced nodes typically takes several years of refinement. The company must also compete with established foundries that have years of experience and existing customer relationships.
The fiscal year 2027 target for 2nm mass production represents an aggressive timeline, especially considering that even TSMC and Samsung are still ramping up their 2nm production capabilities. Rapidus will need to execute flawlessly on both technical and operational fronts to meet this deadline.
Industry Context and Market Dynamics
The timing of Rapidus's funding announcement coincides with heightened global awareness of semiconductor supply chain vulnerabilities, underscored by recent geopolitical tensions and the COVID-19 pandemic's disruption of chip supplies. Governments worldwide are increasingly viewing semiconductor independence as a matter of economic and national security.
Japan's approach, combining direct government investment with private sector participation, mirrors strategies employed by other nations but with unique Japanese characteristics. The government's control provisions and golden shares reflect a more hands-on approach than seen in some Western countries' semiconductor initiatives.
As Rapidus moves toward its production targets, the semiconductor industry will be watching closely to see whether Japan can successfully rebuild its chip manufacturing capabilities and establish a viable alternative to the current duopoly of TSMC and Samsung in advanced node production.
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