Japan’s Rapidus is set to start construction on a second plant in Hokkaido in fiscal 2027, while the production of 1.4-nanometer chips is slated to begin as early as 2029, Nikkei Asia reported.
The Japanese company’s efforts could potentially narrow the gap with Taiwan Semiconductor Manufacturing (TSM), the world’s largest chip foundry.
The project is expected to cost several trillion yen, with the government providing hundreds of billions of yen in initial support for research and development. The effort is anticipated to act as a key step toward reviving Japan’s chip industry, the report added.
Rapidus did not immediately respond to a request for comment from Seeking Alpha.
At its first facility in Chitose, the company plans to start mass production of 2-nm chips in the latter half of fiscal 2027. In addition, even before mass production of the 2-nm chips is fully mature, Rapidus plans to move ahead with construction of the second plant, which may produce 1-nm chips besides 1.4-nm products, the report noted.
The total investment in the second plant is expected to surpass 2T yen.
Government support would make up much of the funding, with the balance to be secured via loans from Japan’s banks and investment by private companies. The loans will be backed by government guarantees, according to the report.
Beginning in fiscal 2026, Rapidus intends to start full-scale research and development, or R&D, on 1.4-nm products while continuing its collaboration with IBM (IBM), which provides technology for 2-nm chips.
IBM and Rapidus had entered a partnership in December 2022 to build semiconductor technology aimed at developing IBM’s breakthrough 2-nm technology for implementation by Rapidus at its fab in Japan.
Rapidus noted in July that a 2-nm device was functioning, but it has yet to set a path to mass production. Rapidus hopes setting mass-production targets for nodes smaller than 1.4 nanometers will help secure long-term customers, the report added.
In general, a smaller nanometer size suggests higher performance and energy efficiency.
Advanced 1.4-nm chips are expected to be used in high-tech products and applications like data centers, robots, autonomous vehicles and smartphones.
TSM plans to mass-manufacture 2-nm chips this year and 1.4-nm chips in 2028. South Korean tech giant Samsung Electronics (OTCPK:SSNLF) intends to mass-produce 1.4-nm chips in 2027, the report noted.
After starting manufacturing in 2029, Rapidus would aim for quick mass production to keep pace with competitors. However, Samsung and Intel (INTC) are reportedly struggling to improve yield rates for their cutting-edge products, indicating that Rapidus could also face challenges, the report added.
Rapidus has been receiving subsidies from the Japanese government. Last week Rapidus announced that it has been selected as the official business operator by the Japanese government.
In October 2023 it was reported that Japan intended to secure an additional 1.49T yen, or roughly $10B, in subsidies for two vital semiconductor projects. One for TSM and the other for Rapidus. In April 2024, Japan approved about ¥590B (around $3.9B) in subsidies to Rapidus, as part of the country’s efforts to boost local semiconductor manufacturing.
Last year, in November, it was reported that the Japanese government planned to invest $1.28B in Rapidus to help the company reach commercial production by 2027.
Rapidus’ CEO Atsuyoshi Koike reportedly said in April that the company was in discussions with Apple (AAPL), Alphabet’s (GOOG) (GOOGL) Google, and several others about mass-producing processors for their respective needs.