Japan is investing ~$16 billion in Rapidus, a state-backed venture aiming for 2 nm chip mass production by late 2027 — its boldest move to reclaim semiconductor leadership since losing DRAM dominance in the 1990s. Though no longer competitive in advanced logic or HBM, Japan still holds de facto monopolies in EUV photoresists, coaters, ABF, and lithographic masks. Government subsidies totaling $25.7 billion over three years — the highest GDP share among developed economies — also support TSMC’s Kumamoto fab and Micron’s Hiroshima expansion. Rapidus’ ‘golden voice’ governance gives the state veto power on strategic decisions, reflecting its national security priority.
According to knews.media, Japan is deploying unprecedented public investment — totaling approximately 2.6 trillion yen (approx. USD 16 billion) by the end of the 2026/27 fiscal year — to revive its semiconductor leadership through Rapidus, a state-backed microprocessor venture founded in 2022.
From Dominance to Decline
At its peak in the late 1980s, Japan accounted for about half of the global semiconductor market, controlling roughly 80 percent of global DRAM supplies in 1987. Japanese firms Canon and Nikon held a duopoly in wafer exposure machinery at the turn of the 1980s and 1990s. That dominance eroded sharply: Elpida, Japan’s last major DRAM maker, went bankrupt in 2012 and was acquired by Micron in 2013; ASML displaced Canon and Nikon in advanced lithography; and Japan lost relevance in the most strategic segments — advanced logic for AI and high-bandwidth memory (HBM) — where Taiwan, South Korea, and the U.S. now lead.
Strategic Niche Strengths Remain
Despite this regression, Japan retains critical, often irreplaceable, roles in the global supply chain. The source states Japanese companies have de facto monopolized production of EUV photoresists and coaters, and remain key suppliers of lithographic masks, silicon wafers, and ABF — a layered insulating material used in advanced substrates. Kioxia remains a leading NAND flash memory producer, and Sony dominates the photosensitive matrix market.
Government-Led Reindustrialization
In response to supply chain shocks during the COVID-19 pandemic — acutely felt by Japanese automakers — Tokyo declared semiconductor self-sufficiency a national security priority. Over three years, Japan allocated 0.71% of GDP — USD 25.7 billion total — to semiconductor development, the highest share among developed economies. This funding supported foreign investment incentives including:
- TSMC’s first Japanese fab in Kumamoto (co-owned with Sony, Denso, and Toyota), producing legacy nodes for automotive use;
- Micron’s DRAM expansion in Hiroshima, backed by 192 billion yen in government support.
Rapidus: The Flagship Project
Rapidus is the largest beneficiary of METI’s (Ministry of Economy, Trade and Industry) semiconductor strategy. Though initially capitalized by eight private firms — Denso, Kioxia, MUFG Bank, NEC, NTT, SoftBank, Sony, and Toyota — and later joined by 26 additional investors by February 2026, the project has been conceived from the outset as primarily publicly funded. It is building a cutting-edge microprocessor factory on Hokkaido Island, targeting mass production of 2 nm chips in the second half of 2027, in collaboration with IBM. This would make Rapidus the first entirely new manufacturer of the most advanced chips in many years — and several months behind TSMC’s own 2 nm ramp.
The Japanese government secured a “golden voice” governance mechanism: while limited to a maximum of 11.5% voting rights, it holds veto power over all strategic decisions — underscoring the project’s centrality to national industrial policy.
Practitioner Implications
For global supply chain professionals, Rapidus signals a structural shift: Japan is no longer solely an enabler of upstream materials but is reasserting vertical capability in high-end logic manufacturing. Its success — or failure — will influence regional diversification strategies, especially for automotive and industrial OEMs reliant on secure, geopolitically stable chip sources. The heavy public backing also highlights how national security imperatives are reshaping supplier qualification criteria, contract terms, and long-term capacity planning across semiconductor-dependent industries.
Source: knews.media
Compiled from international media by the SCI.AI editorial team.
