Japan firms form new company for domestic production of next-generation semiconductors

Courtesy of KIOXIA Holdings Corp.
A clean room to produce semiconductors at KIOXIA’s Yokkaichi factory in Mie Prefecture in 2021

Eight major Japanese firms have formed a new company to produce next-generation semiconductors in Japan, aiming to establish the manufacturing technology of the important industrial product for the sake of Japan’s economic security toward the latter half of the 2020s.

The name of the new firm is “Rapidus,” which means “rapid” in the Latin.

The eight companies are Toyota Motor Corp., NTT Corp., Sony Group Corp., NEC Corp., SoftBank Corp., Denso Corp., KIOXIA Corp. (formerly Toshiba Memory Corp.), and MUFG Bank.

The total investment to set up the new company is likely to be more than ¥7 billion. Investment and participation by other companies will be encouraged.

The new company will develop next-generation semiconductors, which are indispensable to sectors in which it is necessary to instantly process large amounts of data, such as artificial intelligence and smart city development.

The government has announced on Friday that it will invest about ¥70 billion, mainly to establish a research and development base for the new company. In the second supplementary budget proposals for fiscal 2022, the government has allocated about ¥1.3 trillion to promote and support the domestic semiconductor sector.

Japan and the United States reached an agreement to cooperate in research and development on next-generation semiconductors at a meeting in July of the Japan-U.S. Economic Policy Consultative Committee, which comprises the two countries’ foreign and economic minsters and is also known as the economic two-plus-two talks.

The new company will closely cooperate with the research and development base with the participation of other entities, including the University of Tokyo and the National Institute of Advanced Industrial Science and Technology, aiming for the establishment of the mass production technology in Japan.

Currently, Taiwan has an about 90% of share of the global market for semiconductors with a circuit line width of under 10 nanometers. (A nanometer is one-billionth of a meter.) In case of an emergency in the Taiwan Strait, there is concern that the procurement of the semiconductors could be delayed. Under such circumstances, it has been a pressing issue for Japan to strengthen its domestic production base.

Although the Japanese government has supported the realignment of the Japanese semiconductor industry, its efforts have not gone smoothly.

For example, Elpida Memory Inc., which was born through a merger of semiconductor operations of Hitachi Ltd. and NEC, went bankrupt in 2012.

As for Renesas Electronics Corp., formed in the merger of semiconductor sectors of Hitachi, Mitsubishi Electric Corp. and NEC, it has a strength in semiconductors for automobiles but has not been able to make its presence felt in the global semiconductor industry.

It is said that the thinner the circuit lines of semiconductor chips are, the higher their processing ability becomes. The new company is considering producing semiconductors with a circuit line width of about 2 nanometers. Production technology has yet to be established for chips of this standard.

Huge amounts of funds are necessary for Japan to compete with the United States, South Korea and Taiwan. It appears important for Japan to establish an environment in which companies will continue their active investment into semiconductor production.