Japan to give domestic chip producer $3.9bn subsidy

The Japanese government has decided to offer ¥590bn ($3.9bn) in subsidies to semiconductor producer Rapidus, aiming to strengthen domestic chip development and production.

The country's ministry of trade and industry (Meti) on 2 April announced it will provide extra subsidies for Rapidus, in addition to the ¥330bn subsidy that it already allocated in 2022, bringing its national budget expenditure up to around ¥1 trillion for a single chip producer. Meti has not denied whether it will grant further subsidies to the company if necessary.

Rapidus was launched in 2022 by a consortium of eight Japanese companies, including automotive, electronics and chip manufacturers such as Kioxia, NEC, Nippon Telegraph and Telephone, SoftBank, Sony and Toyota. Rapidus aims to develop 2 nanometre node technology, and expects to start mass chip production by early 2027, according to the company, although the output volume is yet to be disclosed.

Meti's latest subsidy comes after a decision to support the development of new technologies including chip packaging, which could help to increase the price competitiveness of semiconductors, according to a Meti official.

The Japanese government has boosted its financial support for the domestic chip industry following its December 2022 decision to designate semiconductors as one of the 11 critical materials required to meet long-term demand trends, and reduce its exposure to China.

Japan in December 2023 granted ¥129.4bn in subsidies to domestic semiconductor producers Rohm and Toshiba, for their domestic investment in silicon carbide and silicon semiconductor products. The government's financial support accounted for around 33pc of their total investment, but the detailed breakdown was undisclosed.

By Yusuke Maekawa