The Japanese government has increased its support for the ‘Japan-version Taiwan Semiconductor’ with cumulative investments reaching 16 billion US dollars to assist Rapidus in advancing into AI chips.

Japan has invested 16 billion US dollars to support the startup company Rapidus in entering the artificial intelligence chip sector.

According to Zhitong Finance APP, Japan has approved an additional subsidy of 631.5 billion yen (USD 4 billion) to Rapidus Corporation to expedite the company’s entry into the highly competitive AI chip manufacturing sector. This funding aims to support Rapidus in providing services for IT enterprise Fujitsu Ltd., one of the first clients the Japanese government hopes will help launch this landmark project.

Japan’s Ministry of Economy, Trade and Industry stated on Saturday that this new funding will bring the total amount of grants and investments provided by the government to this startup to 2.6 trillion yen (approximately USD 163 billion) by the end of the current fiscal year in March 2027. The ministry also noted that an external committee reviewed Rapidus’ foundry located in Hokkaido in northern Japan and acknowledged its technological advancements.

This emerging company began developing wafers using 2-nanometer technology last year, with the goal of achieving mass production of cutting-edge semiconductors by 2027 and helping Japan reduce its reliance on industry leader Taiwan Semiconductor (TSM.US). Japanese policymakers consider Rapidus’ success and technical independence in artificial intelligence, robotics, and quantum computing crucial for national security.

This Japanese chipmaker still lags significantly behind Taiwan Semiconductor, which began mass production of 2-nanometer chips last year and is the preferred chip supplier for NVIDIA (NVDA.US) and Apple (AAPL.US). In addition to technological barriers, Rapidus—like other resource-scarce Japanese manufacturers—has been squeezed by rising energy and raw material costs amid Middle Eastern conflicts. Amid a surge in demand for key chips in AI development causing tight global supplies of memory and other semiconductors and threatening economic stability, Tokyo is pinning its hopes on Rapidus.

According to a statement issued by Japan’s Ministry of Health, Labour and Welfare, Rapidus plans to conduct an initial public offering (IPO) around the fiscal year 2031, targeting approximately 3 trillion yen in public financing, with part of the funds coming from government loan guarantees. The company has established an analysis center in Chitose City, Hokkaido, for testing and diagnosing Rapidus chips to improve chip yield; additionally, its back-end process development center has also commenced operations.