In 2016, the Japanese government introduced an ambitious vision for the future known as “Society 5.0” through its Fifth Science and Technology Basic PlanThis concept encompasses the integration of advanced technologies such as artificial intelligence (AI), quantum computing, and autonomous vehicles into various sectors, including manufacturing, services, and everyday lifeCentral to this vision is the necessity for cutting-edge semiconductors, which serve as the foundational support for these advanced technologiesAs such, the government recognizes the urgency in achieving domestic production and mass manufacturing of advanced semiconductor technologies.

To invigorate its semiconductor industry, the Japanese government catalyzed the formation of a new semiconductor enterprise called Rapidus in 2022. The primary objective of Rapidus is to develop and manufacture state-of-the-art 2-nanometer process semiconductors

Advertisements

The company aims to establish a pilot production line by April 2025, with plans for full-fledged mass production to commence by 2027. However, despite this ambitious goal, many have raised questions concerning Rapidus’s capability to actualize these objectivesCritics emphasize that numerous significant hurdles must be overcome, including technology development, customer acquisition, and securing a staggering budget of 5 trillion yen.

Realistically, the journey to achieving mass production of advanced semiconductors in Japan necessitates a process of “technology transfer.” Japan has historically excelled along the semiconductor supply chain at the upstream levels, including materials and equipment, but has struggled in the highly competitive realm of product miniaturizationPreviously, Japan was capable of manufacturing general-purpose semiconductors with a technology node of 40 nanometers, yet the leap to producing cutting-edge 2-nanometer chips presents substantial technical challenges

Advertisements

To bridge this gap swiftly, Rapidus has acquired extreme ultraviolet lithography (EUV) equipment, a product of the joint efforts of Belgium's imec and the Dutch company ASMLFurthermore, by collaborating with IBM, Rapidus plans to implement essential technologies such as Gate-All-Around (GAA) structures necessary for 2-nanometer semiconductor developmentIn April 2023, a team of over 100 technicians was dispatched to learn critical skills for these advancements.

Nevertheless, complications emerged on this frontIn the same month, GlobalFoundries, a prominent American semiconductor foundry, filed a lawsuit against IBM, alleging the illegal acquisition of trade secrets and intellectual propertyGlobalFoundries indicated that following its acquisition of IBM's semiconductor division in 2015, IBM continued to provide technologies to companies like Rapidus, allegedly profiting from unauthorized revenue streams

Advertisements

Despite IBM's attempts to quash the lawsuit, the courts dismissed its efforts, placing the future of the partnership between IBM and Rapidus in jeopardyWithout IBM's technological support, Rapidus could face formidable challenges in its quest to develop advanced semiconductor technologies.

Another significant concern for Rapidus lies in customer acquisition and establishing a competitive presence in the international marketExperts recognize that demand for advanced semiconductors within Japan is presently limitedTherefore, Rapidus must target international markets such as North America and Europe, promoting its advanced semiconductor solutions in AI, autonomous vehicles, quantum computing, and even healthcare sectorsHowever, navigating the competitive landscape will be no easy featEstablished players like South Korea’s Samsung and America’s Intel have solidified their positions in the semiconductor foundry market, capitalizing on economies of scale and mass production to drive down costs

• Gold Prices Surge Dramatically!
• A-Share Surge Exceeds 2500%!
• AI Milestone Achieved
• Japan's Chip Production Hits Snags
• Positive Outlook for U.S. Manufacturing

For Rapidus, simply possessing cutting-edge technology will not be sufficient; without tangible business opportunities, the company’s revenue prospects could be gravely compromised.

At the center of uncertainties surrounding Rapidus’s future is the sourcing of fundingInitially, upon launching its operations, Rapidus set a daunting financial requirement of 5 trillion yen for achieving mass productionWhile private sector investments provided approximately 73 billion yen at the company’s inception, the government currently subsidizes Rapidus with a substantial 920 billion yen, leaving a significant funding gap of over 4 trillion yenAlthough Rapidus hopes to bridge this gap through corporate investments, bank loans, and government grants, the feasibility of these avenues remains questionableCorporations involved express that the government should take the lead in financing due to the nascent stage of R&D, which makes it challenging for them to invest extensively

On the other hand, the government argues that without private sector presence, it cannot shoulder the financial burden aloneReports have surfaced indicating discord within the Japanese government's ranks, particularly between the Ministry of Economy, Trade and Industry and the Ministry of Finance regarding semiconductor support effortsThe Ministry of Finance argued that Japan's government financial expenditure on semiconductor support is overly burdensome concerning its gross domestic product (GDP), while the Ministry of Economy presented counter-arguments supported by data.

Amidst all of this, in July of this year, former Prime Minister Fumio Kishida visited the construction site of Rapidus's plantHe vowed to expedite the introduction of a legislative proposal to support the mass production of advanced semiconductors to the DietHowever, by September 20, the current Minister of Economy, Trade and Industry, Ken Saito, suggested that presenting the legislation within the current session of the Diet might be unrealistic

Analysts attributed this to the impending dissolution of the House of Representatives shortly after the ruling party election, complicating the timeline for thorough legislative reviewGiven these developments, it is probable that the proposal may not materialize until the Ordinary Diet session in early next year, further clouding Japan's prospects for achieving advanced semiconductor mass production by 2027.

Ultimately, the combination of inadequate core technologies, equipment shortages, uncertain market possibilities, and expansive budget deficits casts a shadow over Japan’s aspirations for semiconductor self-sufficiency and mass productionThe political landscape is in flux, and how the subsequent leaders navigate this complex and evolving scenario remains to be seenThe path forward will undoubtedly require careful negotiation, strategic partnerships, and a genuine commitment to innovation in order to reclaim Japan's place in the global semiconductor arena.