Rapidus plans to start mass production of 2-nanometer semiconductors in 2027

Rapidus Japan, which is striving to realize the most advanced semiconductor foundry, held a groundbreaking ceremony for its plant in Chitose City, Hokkaido, on September 1st. Rapidus aims to start mass production of cutting-edge semiconductors with a circuit line width of 2 nanometers (nanometer is 1 billionth of a meter) in 2027. In order to realize mass production, it is necessary to overcome the three major obstacles of developing manufacturing technology, obtaining domestic and overseas customers, and securing a huge amount of capital totaling 5 trillion yen.

Rapidus plans to complete construction of the factory building by October 2024. The pilot production line will be launched in April 2025 after moving in the production equipment. It aims to mass-produce 2-nanometer semiconductors in 2027, and will acquire 2-nanometer semiconductor design technology from IBM, a U.S.-based company that specializes in semiconductor technology development.

At a press conference held after the groundbreaking ceremony, Tetsuro Azuma, Chairman of Rapidus, said, “The future is an era in which cutting-edge equipment will influence all industries. We want to create good products that can be passed on to future generations.”

One of the issues facing mass production is technical obstacles. At domestic factories, “computing semiconductors,” which are the brains of electronic products, can only be produced at a maximum of 40 nanometers for general-purpose products. The reason for this is that domestic companies have withdrawn from the miniaturization competition that used to increase the integration of semiconductors.

In the absence of a mass-production plant for cutting-edge products in Japan, and in the absence of technicians, Rapidus is striving to leapfrog into mass production of the next-generation, state-of-the-art 2-nanometer semiconductors.

In the case of very small 2-nanometer semiconductors, semiconductor circuits cannot be processed without lithography equipment and peripheral equipment that support the latest technology, the extreme ultraviolet (EUV). These equipments are becoming a target of competition in the world.

In terms of semiconductor materials, there is joint development of material structures and composition ratios with material manufacturers, etc. Rapidus is also working to secure equipment and materials. Mr. Tetsuro Higashi, President of Rapidus, said, “We will expand our cooperation with overseas equipment manufacturers such as LamResearch in the U.S. and ASML in the Netherlands in order to make mass production a success.

The second topic is customer development. In the semiconductor foundry field, TSMC has more than half of the world’s share. Semiconductor manufacturers around the world, including NVIDIA in the U.S., entrust TSMC with their manufacturing. South Korea’s Samsung Electronics and the U.S. Intel are also involved in foundry. Rapidus has no chance of winning against the giant companies in the competition for investment to realize low cost through mass production.

Rapidus proposed a plan to focus on high value-added custom semiconductors. A small number of varieties can flexibly meet customer needs, but if the unit price of the chip is not set higher, it will not be possible to recover the investment in development costs and production costs.

Junyoshi Koike, President of Rapidus, commented, “The unit price of computing semiconductors is 10 times higher than that of general-purpose products that are mainstream in Japan.” The company is currently in the process of approaching potential customers such as eight capital-supporting companies and major U.S. IT companies. Although demand is expected in the supercomputer and artificial intelligence (AI) semiconductor fields, it will not be easy to find customers willing to pay a high price to work with Rapidus.

The final topic is financing. Rapidus projects that it will need 2 trillion yen by April 2025 before the pilot production line goes into operation, and a total of 5 trillion yen in funding by 2027 for mass production. The company has received a ¥330 billion subsidy from Japan’s Ministry of Economy, Trade and Industry, but plans to seek further support from the Japanese government. In order to raise funds on its own, it is also discussing the implementation of an initial public offering (IPO).

South Korea and Taiwan have nurtured world-leading semiconductor companies by providing policy support to specific companies and pooling private capital. can Rapidus realize its proposed business plan? Its success or failure will be a litmus test for Japan’s semiconductor revitalization.