According to Nikkei, Rapidus chairman Tetsuro Higashi stressed in an interview that achieving the goal of producing 2nm chips involves overcoming three significant challenges- the technical feasibility of mass production, market and customer positioning, and funding issues, particularly regarding its heavy reliance on resources from the Japanese government.
Technical feasibility of mass production
As Japanese manufacturers have only reached mass production on processes down to 40nm, Rapidus's direct pursuit of 2nm technology is typically seen as a reckless endeavor.
Higashi believes that since semiconductor equipment manufacturers have long been involved in advanced semiconductor technologies, and Rapidus is collaborating with institutions like IBM to integrate technology and experience, they have confidence in achieving mass production of 2nm chips.
Higashi had also considered entering the mid-tier semiconductor manufacturing market but concluded that existing companies with completed depreciation would create unfavorable conditions for new entrants. In contrast, the advanced market offers more equitable competitive conditions.
Market and customer positioning
From the outset, Rapidus has positioned itself as an alternative supplier to TSMC, aiming to differentiate itself by creating a market for specialized semiconductors, unlike larger firms that excel in producing large-scale and standardized products.
During Semicon Japan 2024, Higashi discussed how standard chips waste excessive energy, arguing that semiconductor products should shift from standardized offerings to specialized chips tailored for specific applications. Through technological innovation, future semiconductor products could reduce energy consumption to one-fifth of current levels.
These specialized areas include robotics, autonomous driving, and telemedicine. Higashi anticipates that the generative AI market will pivot towards optimized dedicated chips for various algorithms, leading to dramatic changes in the market environment.
Funding issues
Due to private investors perceiving high risks regarding Rapidus's ability to actually produce advanced chips, the company currently relies heavily on financial support from the Japanese government.
Rapidus estimates that reaching the stage of mass production for 2nm chips will require JPY5 trillion (approx. US$32 billion). Currently, its primary source of funding comes from government subsidies over three consecutive fiscal years, totaling JPY920 billion.
The Japanese prime minister and other officials have repeatedly stressed that the government plans to allocate over JPY10 trillion to support the development of the semiconductor and AI industries by the fiscal year 2030 to stimulate private investment, with support for Rapidus being a focal point of this policy.
However, if Rapidus continues to rely solely on government support, it may effectively become a state-owned enterprise. Concerns persist within the Japanese industry and media about state-owned semiconductor companies potentially becoming costly ventures with limited effectiveness.
Higashi stressed that while Rapidus currently depends mainly on government support, the ultimate goal is to achieve independence.
In the coming years, Rapidus aims to increase the proportion of private funding, seeking to finance factory construction through bank loans or capital increases from private shareholders, targeting approximately half of the equipment investment costs to come from private sources.
