Photo/Illutration Construction of a Rapidus Corp. chip plant is under way on Nov. 21 in Chitose, Hokkaido, beside New Chitose Airport. (Takayuki Kakuno)

The government is set to allocate an additional 800 billion yen ($5.2 billion) to Rapidus Corp., Japan’s leading semiconductor startup, in its supplementary budget proposal.

The government had already committed up to 920 billion yen to Rapidus, but the company is estimated to need an additional 4 trillion yen to achieve its goal of mass-producing 2-nanometer semiconductors by 2027.

This huge investment in Rapidus is part of the government’s efforts to revive Japan’s once-great chip production industry, which is now far behind global leaders, such as Taiwan and South Korea.

The latest allocation for the company is part of a broader 1.6-trillion-yen package aimed at bolstering the nation’s semiconductor and artificial intelligence industries.

This is close to the 1.8 trillion yen included in the supplementary budget for the last fiscal year.

Citing the growing importance of semiconductors for economic security, the government has invested a total of 3.9 trillion yen in the chip industry over the three years since April 2021.

However, some argue that supplementary budgets should be reserved for urgent projects.

Critics have also pointed out that the government’s support for Rapidus lacks long-term planning and strategic principles.

To address these concerns, the government has unveiled plans to establish a new framework to provide extensive support for the semiconductor sector up to fiscal 2030.

The funding for this initiative will come from various sources, including existing funds held by the economy ministry and revenue from the sale or dividends of government-held shares.

The government hopes that the initiative will help attract 50 trillion yen in public and private investment over the next decade, generating a ripple effect of 160 trillion yen across the economy.

(This article was written by Kenji Izawa and Tetsuya Kasai.)

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