JAPAN approved up to 590 billion yen (S$5.3 billion) in subsidies to chip venture Rapidus, committing more money to its ambition to catch up in semiconductor manufacturing.

The additional funding will help Rapidus buy chipmaking equipment and also develop advanced back-end chipmaking processes, Economy Minister Ken Saito said. The amount is on top of billions of public money the 19-month-old startup has already received in its long-shot bid to mass produce chips in Japan’s northernmost prefecture of Hokkaido and compete with leaders Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics.

“The next-generation semiconductors Rapidus is working on are the most important technology that will dictate the future of Japanese industry and economic growth,” Saito said during a regular news conference on Tuesday (Apr 2) in Tokyo. “This fiscal year is extremely important for Rapidus.”

Japanese chip equipment makers rose on the news with Tokyo Electron climbing as much as 3.2 per cent and Disco gaining 2.3 per cent during early morning trade.

The sum is part of around four trillion yen Japan has earmarked over the last three years to regain some of its former chipmaking prowess, with Prime Minister Fumio Kishida targeting 10 trillion yen in financial support to chipmakers, along with the private sector. Japan has committed billions of US dollars into TSMC’s first factory in Kumamoto, southern Japan, as well as to Micron Technology’s expansion at its Hiroshima plant to make advanced Dram.

Rapidus is teaming up with researchers at IBM as well as its own experts in nanotechnology and materials to close the gap with TSMC in cutting-edge fabrication technology. TSMC holds the biggest share of the world’s outsourced advanced chip production, with closest rival Samsung struggling for years to catch up.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Growing geopolitical tensions are spurring governments around the world to broaden domestic capabilities to make semiconductors, which are crucial for running cars, power plants and weapons systems, as well as consumer electronics. The US has also pledged billions of US dollars to chipmakers, but delays in licensing and subsidy allocations have held back factory construction plans.

Japan’s three decades of economic stagnation and loss of international competitiveness were caused in part by lack of understanding about the importance of semiconductors for digitalisation, decarbonisation and economic security, Saito said.

“It is no exaggeration to say that chips are the foundation for this country’s industries and those of the world,” he said. BLOOMBERG