Japan's Ministry of Economy, Trade, and Industry (METI) has allocated JPY100 billion (US$638 million) in its fiscal 2025 budget proposal (April 2025 to March 2026) to support domestic semiconductor startup Rapidus. The ministry also plans to introduce legislative changes during the 2025 regular session of the National Diet to bolster Rapidus and similar ventures.
Government and private sector rally behind chip initiative
According to the Yomiuri Shimbun and Nikkei, METI convened an expert panel on December 25, 2024, to evaluate strategies for promoting next-generation semiconductor mass production. The ministry's fiscal 2025 budget proposal includes JPY330 billion to boost the AI and semiconductor sectors, with JPY100 billion allocated exclusively to Rapidus—accounting for nearly a third of the total budget.
Toyota and Kioxia are considering new or additional investments in Rapidus, collectively amounting to an estimated JPY100 billion. This private-sector investment, combined with government funding, is projected to secure JPY200 billion in total investment for Rapidus by 2025.
Equipment acquisition takes priority
The Japanese government's financial support, including direct funding and debt guarantees, will be channeled through the Information-technology Promotion Agency (IPA), an independent body under METI. The detailed allocation strategies are set to be finalized by January 2025, with the funds primarily directed toward acquiring advanced semiconductor lithography equipment and other essential infrastructure.
Strategic facility transfer bolsters production timeline
To support Rapidus's goal of starting mass production by 2027, Japan's New Energy and Industrial Technology Development Organization (NEDO) plans to transfer ownership of its under-construction "IIM" facility to Rapidus. The transfer will be conducted as an in-kind capital contribution, with Rapidus issuing equity shares of equivalent value.
Legislative changes to streamline support
METI is set to propose amendments during the 2025 regular session of the National Diet to further support Rapidus. The key changes will include revisions to the Act on the Promotion of Information Processing to enhance IPA's capabilities and adjustments to the Act on Special Accounts to streamline funding mechanisms.
Building a sustainable ecosystem
IPA, representing METI in funding Rapidus, outlined its vision during a TV Tokyo interview with Commissioner Yutaka Saitou. The commissioner highlighted the importance of fostering an ecosystem where Japan's industrial players embrace Rapidus's semiconductor solutions. To achieve this, IPA plans to leverage its government-private digital infrastructure network to support Rapidus in growing its client base.
Expert panel members raised concerns over excessive government intervention potentially disrupting Rapidus's operations. To maintain robust corporate governance, future discussions will explore voting rights structures, including the potential issuance of shares with restricted voting rights to limit direct government influence.
Although Rapidus remains the focal point of Japan's AI and semiconductor funding initiatives, METI aims to enhance transparency by adopting an open bidding process to select future beneficiaries. If the proposed legislative changes pass during the upcoming regular session of the National Diet, the bidding process is slated to commence in the fall of 2025.
