Japan Invests $5 Billion More in Semiconductor Giant Rapidus to Revive Its Chip Industry

Japan is doubling down on its efforts to reclaim its position in the global semiconductor industry, announcing an additional $5.4 billion in funding for chip-making venture Rapidus. The latest investment, revealed by Japan’s industry ministry on Monday, brings total government support for the company to 1.7 trillion yen ($11.4 billion).

Rapidus, a consortium backed by major industry players such as Sony, Toyota, and IBM, is set to begin test production at its Hokkaido-based facility in April.

The company aims to mass-produce next-generation two-nanometre logic chips by 2027, a critical step in Japan’s ambition to become a key player in the global semiconductor race once again.

The global demand for advanced, energy-efficient semiconductors is surging, driven by the rapid expansion of artificial intelligence and other emerging technologies.

With semiconductors playing a crucial role in everything from smartphones to electric vehicles, securing a stable domestic supply has become both an economic and national security priority for Japan.

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During the 1980s and early 1990s, Japan dominated the semiconductor industry, holding nearly 50% of the global market with giants like NEC and Toshiba leading the charge. However, over the decades, its share has dwindled to about 10%, though the country remains a major supplier of chip-making equipment and materials.

Rapidus chairman Tetsuro Higashi has described the project as Japan’s “last opportunity” to revive its semiconductor industry, acknowledging the significant financial and technological hurdles the country faces. “Japan is more than a decade behind others. It will require enormous money just to catch up,” Higashi told AFP last year.

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The semiconductor industry has increasingly become a geopolitical flashpoint. The United States, China, Taiwan, and the European Union are all making aggressive moves to secure their chip supply chains amid growing concerns over trade tensions and technological dependencies.

Taiwan’s TSMC, the world’s largest contract chip manufacturer, has also been under pressure to diversify its production as geopolitical risks surrounding China loom large. In response, TSMC opened an $8.6 billion semiconductor plant in Japan last year and is planning a second, $20 billion facility to manufacture more advanced chips.

With this latest investment, Japan is signaling its commitment to regaining a foothold in semiconductor manufacturing. Rapidus’ ambitious goal of producing cutting-edge two-nanometre chips places it in direct competition with industry leaders like TSMC and Samsung.

As the world increasingly relies on high-performance chips for AI, cloud computing, and smart devices, Japan’s renewed push into the semiconductor space could prove vital—not just for its economy but for the broader global tech ecosystem. Whether Rapidus can bridge the technological gap and reestablish Japan as a semiconductor powerhouse remains to be seen, but the stakes have never been higher.