Rapidus, aiming to begin mass production of 2-nanometer chips in Japan by 2027, is seeking significant financial support for its trial production and eventual mass production.
The company is in talks with a trio of major Japanese banks—MUFG Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank alongside Development Bank of Japan (DBJ) for a loan of approximately JPY 100 billion (US$690 million). Rapidus is also seeking additional investment from its existing backers, including Toyota.
Filling in the chips funding gaps
According to sources cited by Kyodo News, the four banks Rapidus is currently negotiating with have all previously provided substantial financing to support the Japan-based Kioxia. Their efforts helped stabilize the finances of the NAND Flash manufacturer to remain competitive in the market.
Rapidus was established in 2022 with JPY 7.3 billion in joint funding from eight Japanese companies, including Toyota, Sony, NTT, NEC, SoftBank, Denso, Kioxia, and MUFG Bank. Additionally, the Japanese government has pledged subsidies totaling JPY 920 billion over three years, which has enabled Rapidus to construct its first factory in Chitose, Hokkaido.
However, Rapidus estimates that trial production of the 2-nanometer chips by 2025 will require JPY 2 trillion, with an additional JPY 3 trillion needed for mass production by 2027. This forecast reveals a funding gap of over JPY 1 trillion for the trial production phase alone, prompting Rapidus to seek loans and additional investment from Toyota and other stakeholders.
Despite these efforts, challenges remain in successfully mass-producing 2-nanometer chips, particularly in terms of technology and securing a sufficient customer base. This has led to cautious attitudes among corporations and financial institutions regarding financing or further investment in Rapidus.
There is no guarantee that Rapidus will secure the loans from the four banks. The Japanese government, under Prime Minister Fumio Kishida, is considering legal revisions that would allow the government to provide guarantees to assist Rapidus in securing private financing.
However, with Kishida set to step down by late September or early October 2024, it remains uncertain whether the government will expedite the legal changes to support Rapidus before the next prime minister takes office.
