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One Man Tries the Impossible in Restoring Japan’s Chip Industry

(Bloomberg) -- Tetsuro Higashi is taking on what seems like an impossible task: Create a globally competitive semiconductor manufacturer in Japan from scratch – and do it in four years.

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The 73-year-old isn’t deterred. He argues the newly created Rapidus Corp. can quickly get up to speed against the likes of Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., with support from the Japanese government and domestic equipment makers.


Rapidus is trying to do what experts argued the country should have done decades ago as it began to lose its edge in the semiconductor industry. The state-backed firm, established in August, is spending billions of dollars on creating a cutting-edge chip foundry by 2027, a domestic asset that would fortify and bolster the Japanese economy.

“Being ahead of others and unique is the only position where you can make a lot of profit,” Higashi, Rapidus’ chairman, told Bloomberg News in an interview. “You make yourself cheap by doing something that someone else has already done.”

Even with governments from Washington to Beijing and Brussels trying to build local semiconductor capabilities, this may be the most audacious bet in the chip industry. Rapidus aims to mass produce 2-nanometer chips just two years after TSMC and Samsung, the industry leaders.

For perspective, leadership in the chip industry, or the ability to craft semiconductors at the most advanced geometries, has been concentrated in the hands of just three companies for years: TSMC, Samsung and Intel Corp. Every other rival has bowed out as they failed to keep up with the money and expertise the trio poured into each generation of silicon — and now even Intel is struggling.

“What Rapidus is trying to do is extremely challenging, but not completely impossible because it works hand in hand with global partners, with authorities of related countries jumping in when necessary,” Akira Minamikawa, an analyst at research company Omdia, said.

Read more: Japan’s Rapidus Seeks Billions of Dollars to Reboot Chip Sector

In a sense, the effort is an attempt to turn the clock back to the 1980s and 90s, when Japan was home to some of the most advanced factories in the industry. Companies such as NEC Corp., Toshiba Corp. and other once-household names lost out over time as they stopped taking the risks need to maintain the latest capabilities.

Higashi, the former chairman and chief executive officer at chipmaking-equipment supplier Tokyo Electron Ltd., argues his venture has all the ingredients it needs to emerge as a force in the industry. The Japanese government has already allocated ¥330 billion ($2.4 billion) for the venture, and the country’s trade minister has said he’s ready to provide a budget of that size every year for the foreseeable future.

“I’m pretty confident about 2-nanometers and then 1.4 soon after, though 1-nm would be a big challenge,” Higashi said. “We are closely working with makers of materials and production machinery, who are already working on the cutting-edge technologies with market leaders including TSMC. Our global partners also promised us their full-fledged support in providing technologies and education.”

Rapidus has so far struck alliances with International Business Machines Corp. and Belgium-based microelectronics research hub IMEC. It also has support from local giants, including Toyota Motor Corp., Sony Group Corp. and SoftBank Group Corp.

Higashi said Japan has domestic suppliers for pretty much all the critical materials, components and production machinery in the chip industry. Many of them are eager to work with a Japanese chipmaker because they can collaborate closely without concerns about losing technological advantages or secrets overseas. Rapidus’ success would also mean the domestic ecosystem could sustain its profits at a high enough level to remain relevant amid intensifying global competition.

“Huge opportunities are ahead of us if we can become first in the market and if we focus on making chips for specific areas, such as AI,” Higashi said.

Japan does have a unique collection of specialist suppliers, including Ajinomoto Co. and Advantest Corp.

Rapidus’ funding now comes only from the government and its corporate partners. Higashi said Rapidus has no intention of tapping the private sector until the company begins making chips, likely in 2027.

Read more: Japan Minister Vows Aid for Rapidus in Push for Advanced Chips

“We’re considering various fundraising measures such as IPO, but our ultimate goal is to become financially independent and stable in making cutting-edge chips,” he said. “Therefore it’s important any cash injections don’t interfere with that.”

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