Japan’s Rapidus bets on an automated chip factory to compete in the semiconductor market

Rapidus Corporation, a Japanese semiconductor manufacturing company, has announced an ambitious plan to build a fully automated factory in northern Japan. The plant will focus on producing 2-nanometer chips, targeting advanced artificial intelligence applications. Automating this production line could reduce lead times by 66%, outpacing competitors such as TSMC and Samsung.

The factory, whose outer structure is due to be completed in October this year, will feature extreme ultraviolet (EUV) lithography tools arriving in December. Prototype production is set to begin in 2025, although mass manufacturing is not expected before 2027.

Rapidus’ focus on full automation, including both front-end and back-end processes, is an attempt to gain a competitive advantage in the industry. Currently, most chip factories are already highly automated at the front-end stage, but the interconnect, packaging and testing stages are still heavily dependent on human labor. By automating all stages, Rapidus hopes to deliver superior performance and faster delivery times compared to its rivals in 2-nanometer chip production.

This move is crucial for Rapidus as the company is two years behind its main competitors, TSMC and Samsung, which will begin production of 2nm chips in 2025. Speed ​​in delivering these chips will be critical in an AI accelerator market that is expected to grow 250% this year.

Despite the optimism, Rapidus faces significant financial challenges before it can operate at full capacity. The company estimates it will need 2 trillion yen ($14 billion) to begin prototypes in 2025, and at least 3 trillion yen ($20 billion) to start mass production. Although it has already pledged 920 billion yen from the Japanese government, the private sector is still holding back due to the company’s lack of a proven track record.

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If Rapidus succeeds in meeting its ambitious automation and production goals, it could establish itself as a key competitor in the global semiconductor market, offering data centers and AI companies greater flexibility in deploying their systems. However, the success of this initiative will depend largely on the company’s ability to secure the necessary financing and overcome the technical challenges posed by full automation of chip manufacturing.

The importance of semiconductors in the global economy cannot be understated, as they are at the heart of modern technology. These tiny devices are present in everything from smartphones and cars to household appliances and advanced artificial intelligence systems. Their role is crucial in accelerating digitalisation, connectivity and the development of emerging technologies such as 5G and quantum computing. As more sectors adopt technological solutions, demand for semiconductors continues to grow exponentially, underlining their strategic importance in the global supply chain.

Dominance in semiconductor manufacturing has generated significant geopolitical disputes. Countries that lead in chip production have a competitive advantage in the global economy, allowing them to influence the direction of technological innovation. Against this backdrop, competition between the United States, China, Japan, and South Korea is intensifying as each nation seeks to secure its position in the market. The success of companies like Rapidus not only impacts the local economy, but may also shift the balance of power in the tech industry globally.