In the 1980s, Japan did not compete in semiconductors and technology. It was devastating. In 1988, Japanese companies controlled more than half of the world semiconductor market, and NEC, Toshiba, Hitachi and Fujitsu were above giants of the time in the US such as Motorola, Texas Instruments or Intel. That golden era ended with the hyperspecialization that emerged both in South Korea and China and (especially) in Taiwan, but now Japan wants to make a splash again.
what has happened. A year ago the technology industry was surprised by the birth of Rapidus Corporationa company born from the alliance of several Japanese giants (Sony, Toyota, SoftBank) with the aim of returning to Japan part of its relevance in the field of semiconductors. The initial plan was very ambitious: they wanted to jump directly to 2 nm by 2027. As we will see later, they have had to delay that forecast, but what has also changed (a lot) is the structure of the company.
Japan like main investor. The Japanese government has decided to make Rapidus a centerpiece of national security, and is taking unprecedented control of the company. He will become the largest shareholder, although initially he will only exercise 10% of the voting rights to leave management in private hands. Of course: the State reserves the right to raise that participation above 50% if the company is experiencing difficulties. Total capital has skyrocketed to 420 billion yen ($2.7 billion), when in 2022 the investment did not exceed 50 million.
The golden action. The Japanese executive has made use of a legal mechanism by acquiring the so-called “golden shares” with which he can exercise his veto in critical decisions such as changes in management or mergers. The objective is to shield Rapidus against foreign capital acquisitions and guarantee the sovereignty of the project. Which is exactly the same thing we are seeing around the world, of course: each country wants to have its own apples in its basket.
Investors who are also clients. Financial support comes from the Japanese government, but also from some large Japanese business groups such as the aforementioned Sony and Toyota or Denso. In total, 32 companies have invested 167.6 billion yen (1.075 billion dollars) and will contribute to this commitment by also being customers of the silicon that Rapidus can produce.
They remain just as ambitious… or more. Rapidus CEO Atsuyoshi Koike has adjusted the development plans for his chips, and has delayed the arrival of mass production to March 2028. That’s bad news, but not so much when we discover that the company has plans to go beyond 2nm and is preparing to be able to make 1.4nm chips and even 1 nm.
Fast as gunpowder. One of the factors that want to differentiate Rapidus is its promise of rapid delivery of semiconductors. The project aims to automate both the manufacturing, packaging and testing of the chips. These last two are processes with great manual intervention, but at Rapidus they believe they have the key to making them much more autonomous. If they succeed, they could reduce the cycle time of semiconductors by 66% and thus beat even giants like TSMC by the way.
Japan turns to chips. Japan’s aspiration is striking, and its Prime Minister, Sanae Takaichi, seems to be clear that the commitment to this segment must be notable. In fact, Japan is investing a proportion of its GDP (0.71%) in semiconductors much higher than that of the US (0.21%) or Germany (0.41%).
Challenges. The strategy, of course, has its critics. Takero Doi, professor at Keio University, point “There are many cases in which public-private investment has led to systems that lacked accountability. It is important to clarify who will lead the project, the private sector or the government.”
Plan B. Although the plan with Rapidus is ambitious, the country is actually playing both sides. While boosting its own business, the government has made commitments with TSMC to upgrade its manufacturing plants in Japan. This makes it have a hybrid ecosystem: it attracts the experience and knowledge of the semiconductor giant while on the other hand trying to create a national alternative.
Image | Xataka with Freepik
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