(Bloomberg) — Japan approved \u00a5631.5 billion ($4 billion) in additional subsidies to quicken Rapidus Corp.\u2019s entry into the high-stakes AI chipmaking arena, ramping up support for a project widely regarded as a long shot.<\/p>\n
The capital is intended to bankroll Rapidus\u2019 work for IT firm Fujitsu Ltd., one of the initial clients that Tokyo hopes will get the signature endeavor off the ground. The new money raises the fees and investments that the government is injecting into the startup to \u00a52.6 trillion ($16.3 billion) by the end of the current fiscal year to March 2027, according to a statement from the Ministry of Economy, Trade and Industry. An external committee inspected Rapidus\u2019 foundry in Hokkaido in northern Japan, and signed off on its technological progress, the ministry said Saturday.<\/p>\n
Tokyo is offering financial support to Rapidus to help it secure customers, Minister Ryosei Akazawa told reporters at a Rapidus event in Hokkaido on Saturday. The fledgling company aims to make cutting-edge 2-nanometer chips by 2027, a schedule Akazawa reaffirmed, and help Japan lower its reliance on industry leader Taiwan Semiconductor Manufacturing Co. Policymakers see Rapidus\u2019 success and technological independence in AI, robotics and quantum computing as critical to the country\u2019s security.<\/p>\n
The Japanese state-backed venture, founded in 2022, now faces additional competition for chip expertise from an unlikely quarter: Elon Musk is entering the white-hot arena, partnering with Intel Corp. on the so-called Terafab project to make semiconductors for his companies including Tesla Inc., SpaceX, and xAI.<\/p>\n
Read: Intel to Join Musk\u2019s Terafab in Surprise Move, Lifting Stock<\/p>\n
Despite its latest strides forward, Rapidus remains far behind TSMC, which began 2nm volume production last year and is the go-to chipmaker for Nvidia Corp. and Apple Inc. In addition to technological hurdles, Rapidus \u2014 like other manufacturers in resource-poor Japan \u2014 are getting hit by rising costs for energy and material input during the conflict in the Middle East. Tokyo is counting on Rapidus at a time soaring demand for the chips critical to AI development is squeezing supplies of memory and other semiconductors around the world.<\/p>\n
The Japanese government\u2019s bet on Rapidus is considerable, but likely to get public support due to economic security concerns, said Akira Minamikawa, an analyst with consultancy Omdia who previously voiced doubts about the feasibility of the 2027 mass production target. Now, there is a growing sense that goal may be reached due to \u201csubstantial support\u201d Rapidus has received from partners including International Business Machines Corp., which is licensing technology to the chipmaker, and Dutch equipment supplier ASML Holding NV, he said.<\/p>\n
Still, Rapidus Chief Executive Officer Atsuyoshi Koike has himself acknowledged the mammoth task ahead. Production of cutting-edge semiconductors is technically challenging and expensive. TSMC this year is planning to allocate more than $50 billion in capital expenditures, with no other competitors coming close to winning as many AI accelerator orders.<\/p>\n
Rapidus, which targets an initial public offering around fiscal 2031, aims to secure roughly \u00a53 trillion in private-sector financing partly with the help of government loan guarantees, the Japanese ministry said. It has set up an analysis facility in Chitose, Hokkaido to test and diagnose Rapidus\u2019 chips in an attempt to lift yields, and has also begun operations of a backend processes development center.<\/p>\n
–With assistance from Mayumi Negishi, Masatsugu Horie and Takashi Mochizuki.<\/p>\n
(Adds more details throughout and analyst comment.)<\/p>\n