Japan will contribute up to $500 million to the production of sophisticated chips

As it strives to re-establish itself as a leading manufacturer of cutting-edge chips, Japan announced on Friday that it will spend up to 70 billion yen ($500 million) in a new semiconductor company led by major giants like Sony Group Corp and NEC Corp.

Yasutoshi Nishimura, minister of economy, trade, and industry, stated during a news briefing that semiconductors would be a crucial part of the creation of new cutting-edge technologies in the fields of artificial intelligence, digital industries, and healthcare.

He stated that the brand-new chip company, Rapidus, plans to start producing chips in the second half of this decade.

Japan is rushing to revive its chip manufacturing base as trade tensions between the United States and China worsen and Washington restricts Beijing's access to cutting-edge semiconductor technology to ensure that its automakers and information technology firms do not run out of the essential component.

Japan is also worried that China would try to seize control of Taiwan, the world's primary chip production centre.

As part of that, the Japanese government is providing financial aid to entice foreign chip makers to establish factories in Japan, including 400 billion yen to support the construction of a plant in Kumamoto Prefecture by Taiwan Semiconductor Manufacturing Co. (TSMC), the world's top producer of logic chips, which will supply semiconductors to Sony and autoparts manufacturer Denso Corp.

Additionally, Japan provided a 93 billion yen subsidy in July to support the local production expansion of memory chip manufacturers Kioxia Corp. and Western Digital Corp. It promised to grant $46.5 billion yen to American chipmaker Micron Technology in September so that it could expand output at its Hiroshima plant.

After the two nations decided in July to establish a new joint research centre to develop faster and more power-efficient next-generation 2-nanometer semiconductors, the new chip company represents the next phase in Japan's semiconductor strategy and is a further indication of its deepening cooperation in technology development with the United States.

According to a report on Thursday by TV Tokyo, the new company will also receive investments from businesses like Kioxia Holdings and Nippon Telegraph & Telephone Corp.

According to the report, the Japanese government would establish a new research facility by the end of 2022 to create semiconductors smaller than 2 nanometers.

(source : Reuters)