Toyota joins 7 other Japan companies to make next-generation chips

A eight Japanese companies including Toyota Motor and Sony will team up with the government to launch a new entity to develop and make next-generation semiconductors, Nikkei has learned, aiming to establish manufacturing processes by the late 2020s.

With competition for next-generation semiconductor technology intensifying around the world, the new company will provide a platform for collaboration with U.S. companies, as well as governments.

Toyota supplier Denso, NTT, chipmaker Kioxia Holdings, NEC and SoftBank are among the companies expected to invest in the project, each pouring in about 1 billion yen ($6.8 million).

Tetsuro Higashi, former president of chip equipment maker Tokyo Electron, led the establishment of the new company. MUFG Bank will also participate, and the new firm will solicit further investment and cooperation from other companies.

The Japanese government will support the project through subsidies and other means. The industry minister on Friday announced a strategy for domestic production of advanced chips through the new firm set up by the eight Japanese companies, pledging to provide 70 billion yen ($494 million) in subsidies.

Named Rapidus, from Latin meaning “rapid,” the new company aims to develop the next generation of logic semiconductors used in computing, known as “beyond 2-nanometer technology,” and to build a production line by the end of this decade. From around 2030, it will aim to start contract manufacturing for companies that design and use semiconductors.

Logic semiconductors, with smaller circuit widths that perform to a higher standard, determine the processing capabilities of smartphones, data centers and other devices. Semiconductors with high computing performance and related technologies will also be important for advanced communication networks and fully automated driving.

Companies are keen to invest in this area as part of future-proofing and staying competitive in the development and manufacturing of cutting-edge technologies.

Taiwan Semiconductor Manufacturing (TSMC) and Samsung Electronics have already established mass-production technology for 3-nm chips and plan to mass-produce 2-nm ones in 2025.

Rising geopolitical risks have increased the need for companies to secure their own manufacturing capacity of advanced chips, which is dominated by Taiwanese entities now.

Japan and the U.S. have agreed to cooperate in research and development in next-generation fields. The government in Tokyo included approximately 350 billion yen for a Japan-U.S. research center in its second supplementary budget for fiscal 2022. The center will be set up by the end of this year and is expected to collaborate with domestic and foreign companies and research institutions. Candidates include IBM and imec, a Belgian research institute.

Rapidus is expected to work on setting up mass production capabilities together with the research center. It has already secured 70 billion yen from the New Energy and Industrial Technology Development Organization, a national R&D agency.

Japan has some catching-up to do. Its latest logic semiconductor production lines are for 40-nm chips. Japan had not been able to keep up with the massive investments by companies overseas and other governments as competition in advanced technologies has been hot since the 2010s.

TSMC, which has been constructing a plant in Kumamoto Prefecture on the southwestern island of Kyushu, plans to make 12- to 28-nm products. Japan hopes that this plant can also become a manufacturing base for advanced semiconductors.

Under current plans, the new company will be led by a experienced executives, including Higashi, who negotiated Tokyo Electron’s integration with a U.S. equipment company, and Atsuyoshi Koike, who was the head of Western Digital Japan.

One focus will be hiring engineers with experience and knowledge of advanced technologies and manufacturing processes. As such, several semiconductor manufacturers have already been approached for human resource cooperation, according to sources.