Japan sets up advanced chip business with Toyota, Sony | Jobs Reply

TOKYO—Toyota, Sony and SoftBank are joining Japanese chip companies in a government-backed effort to design and manufacture next-generation semiconductors in Japan by the end of the decade.

The initiative, called Rapidus, comes amid growing competition between major economies for advanced chips to support applications such as artificial intelligence and autonomous driving, with a deep divide between the US and China complicating supply chains.

Toyota Motor Corporation

TM 0.75%

Sony Group Corporation

sony 1.50%

and chip company Kioxia Holdings Corp. and Tokyo Electron Ltd

8035 2.93%

as well as SoftBank Group Corporation

9984 1.20%

The Japanese government said Friday that the government has pledged about $500 million in subsidies.

A research center for new businesses will be set up this year, the government said.

Sony, Toyota and others are using the Rapidus initiative to diversify and strengthen Japan’s chip supply chain.


Akio Kon/Bloomberg News

“As the battle for control of technology between the United States and China intensifies, the importance of semiconductors from the perspective of economic security is increasing,” said Economy Minister Yasutoshi Nishimura.

Japan, once the world leader in semiconductor production, has fallen far behind the US and Taiwan. Tokyo sees it as a national security concern as well as a problem for local manufacturers, especially automakers that will increasingly rely on advanced chip technology to work on developing features such as autonomous driving.

The investment in Rapidus is less than the billions of dollars a year in capital expenditures of advanced chipmakers. The world’s largest contract chipmaker is expected to spend $36 billion this year alone.

Rapidus president Atsuyoshi Koike said the company will work with groups including US business and tech giant International Business Machines. Corporation

For semiconductor research and development in next-generation 2-nanometer technology and beyond.

Japan is still a leading power when it comes to manufacturing efficiency “and I think this is our last chance,” Mr Koike told a briefing on Friday.

The group will work on preliminary designs for a pilot production line in the next few months, it said. Rapidus aims to start working as a contract manufacturer of logic chip production after an initial research period.

Major economies such as the US and China are pouring public money into boosting domestic chip production, which they see as geopolitically critical. The US Congress passed legislation providing $52.7 billion in direct financial support for chip factory construction and expansion, as well as other programs. China, meanwhile, has spent billions of dollars in recent years trying to catch up with the world’s most advanced chip makers, though it has yet to succeed.

A global chip shortage is affecting how fast we can drive a car or buy a new laptop. WSJ visits a Singapore fabrication plant to see the complex process of making chips and how one manufacturer is trying to overcome shortages. Photo: Edwin Cheng for The Wall Street Journal

For Toyota, Sony and others, the new business aims to help diversify and strengthen their chip supply chains. Companies worldwide have grappled with semiconductor shortages since the late 2020s, when pandemic-driven electronics demand collides with a sudden rebound in car demand.

Earlier this month, Toyota trimmed its annual production target for cars by 500,000 vehicles, citing continued risks of semiconductor shortages. Nissan Motor Co.

and Honda Motors Co.

Their unit sales forecast for the fiscal year ended March was also cut, citing a deficit.

The clash between the U.S. and China over chips has heightened companies’ concerns about their ability to secure stable supplies.

Toyota aims to become more involved in its chip supply chain — working directly on processes such as circuit design that have typically been handled by semiconductor companies in the past, people familiar with the matter said.

As cars become electric, autonomous and Internet-connected, the performance and procurement of semiconductors is becoming increasingly important, a Toyota spokesman said.

Allies including the United States and Japan have worried about the rise of China’s semiconductor industry, as well as the concentration of advanced chip-making in Taiwan, a self-governing island that Beijing claims as part of its territory.

Currently only the chip juggernaut like Taiwan Semiconductor Manufacturing Co.

and Samsung Electronics Co.

Has the financial and technical expertise to produce the most sophisticated chips. Taiwanese and South Korean companies introduced mass-production technology for 3-nanometer chips this year and plan to mass-produce 2-nanometers in 2025.

Last December, Japanese lawmakers approved the equivalent of $5.2 billion in funding aimed at rebuilding the domestic semiconductor industry, which was globally dominant in the 1980s but has declined over the years as it faces competition from Taiwanese and South Korean players. The move is part of Tokyo’s goal of boosting domestic chip revenue to the equivalent of about $100 billion by 2030, nearly three times the 2020 figure. The budget includes billions of dollars in subsidies for domestic leading-edge chip manufacturing.

— Chieko Tsuneoka contributed to this article.

Write to Yang Ji at jie.yang@wsj.com and River Davis at river.davis@wsj.com

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