Japan to invest up to $500 million to manufacture advanced chips

Japan said on Friday it will invest up to 70 billion yen ($500 million) in a new semiconductor company led by tech firms including Sony Group Corp and NEC Corp as it rushes to re-establish itself as a lead maker of advanced chips.

“Semiconductors are going to be a critical component for the development of new leading-edge technologies such as AI, digital industries and in healthcare,” Minister of Economy, Trade and Industry Yasutoshi Nishimura said at a news briefing.

The new chip company will be named Rapidus and aims to begin making chips in the second half of the decade, he added.

As trade friction between the United States and China deepens and Washington restricts Beijing’s access to advanced semiconductor technology, Japan is rushing to revive its chip manufacturing base to ensure its carmakers and information technology companies do not run short of the key component.

Japan is also concerned that China may attempt to take control of Taiwan, the global hub for advanced chip production.

As part of that, Japan’s government is offering financial aid to encourage foreign chip makers to build plants in Japan, including 400 billion yen to help Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading maker of logic chips, build a plant in Kumamoto prefecture that will supply semiconductors to Sony and autopart maker Denso Corp.

In July Japan also offered a 93 billion yen subsidy to help memory chip makers Kioxia Corp and Western Digital Corp expand output in Japan. In September it pledged to give U.S. chipmaker Micron Technology $46.5 billion yen so it can add production capacity at its plant in Hiroshima.

The new chip company represents the next phase in Japan’s semiconductor strategy and is a further indication of its deepening cooperation in technology development with the United States after the two countries in July agreed to establish a new joint research centre to develop faster and more power-efficient next-generation 2-nanometre semiconductors.

The new company would also include investment from firms such as Nippon Telegraph and Telephone Corp as well as Kioxia Holdings, TV Tokyo reported on Thursday.

The report said the Japanese government would set up a new research centre by the end of 2022 to develop sub 2-nanometer semiconductors. Reuters