Hokkaido has long been one of Japan’s major agricultural regions. Today, the northern island known for dairy farms, ski resorts and summer flower fields is being redesigned as the centerpiece of Japan’s most ambitious semiconductor revival in decades. Billions of dollars are now flowing into new factories, research centers and training programs aimed at turning Hokkaido into a centre for advanced chip production.
Rapidus Becomes the Core of Japan’s Chip Push
A key driver of the plan is Rapidus, a relatively new company backed by the Japanese government and major firms including Toyota, Sony and SoftBank. Through a partnership with IBM, Rapidus has raised billions to build Japan’s first cutting-edge chip foundry in decades. The government has already invested $12bn to support construction of a semiconductor “fab” in Chitose, where access to water, electricity and a lower earthquake risk were deciding factors.
Rapidus CEO Atsuyoshi Koike said the design will blend with its surroundings, with the fab covered entirely in grass. The company reached a major milestone this year after receiving an extreme ultraviolet lithography system from ASML, enabling the successful production of prototype 2nm transistors. Only TSMC and Samsung have reached similar results.
Ambitious Timeline Meets Significant Financial Gaps
Rapidus aims to mass-produce 2nm chips by 2027, though analysts say the company still faces hurdles. A 2024 report by the Asean+3 Macroeconomic Research Office said current funding falls short of the roughly 5 trillion yen ($31.8bn; £24.4bn) typically required for mass production. The Center for Security and International Studies noted Rapidus lacks long-term experience manufacturing advanced chips, unlike South Korea and Taiwan’s industry leaders.
Analysts also say Rapidus will need to secure customers in a market dominated by TSMC and Samsung, which have longstanding relationships with major global buyers.
Japan Pours Money Into Semiconductors After Decades of Decline
The government is pushing ahead despite challenges. Japan has committed $27bn to the semiconductor sector since 2020, a larger share relative to GDP than the US pledged through the CHIPS Act. In late 2024, Tokyo announced a further $65bn package for AI and chip development.
This marks a reversal after decades of decline. In the 1980s, Japan produced more than half the world’s semiconductors. Now, it makes just over 10%. Analysts often cite US-Japan trade tensions and the country’s reluctance to maintain subsidies as reasons for its fall.
Demographic and Workforce Pressures Complicate the Plan
Japan’s ageing population continues to strain the national budget, making it harder to channel resources into research and advanced manufacturing. Experts estimate the country will need 40,000 more semiconductor engineers in the coming years. Rapidus is working with universities in Hokkaido to train workers but says it must rely heavily on foreign talent, even as public resistance to migrant labour persists.
Global and Domestic Players Build Momentum Across Japan
Japan’s strategy mirrors developments seen in Kyushu, where TSMC’s 12–28nm chip production has already transformed the region’s economy through higher wages, supplier expansion and infrastructure upgrades. A second TSMC plant is currently under construction.
Other companies are receiving government support as well. Kioxia and Toshiba have expanded fabs with state subsidies, while ROHM has been designated as a key supplier under Japan’s economic security framework. Micron is set to receive $3.63bn for facilities in Hiroshima, and Samsung is building an R&D site in Yokohama.
Hokkaido Attracts New Chip Ecosystem Players
In Hokkaido, interest is growing quickly. ASML and Tokyo Electron have opened offices in Chitose following Rapidus’s decision to build its production facility there. Koike says this cluster could evolve into a global ecosystem for advanced chipmaking.
Rapidus also aims to differentiate itself by speed. Koike said the company expects to produce custom chips three to four times faster than competitors, believing this agility will be its advantage in the global race.
Japan Sees Chips as a Strategic and Security Priority
AI-related demand continues to surge worldwide, while Japan’s automakers are still recovering from pandemic-era supply disruptions. Policymakers see domestic chip production as essential to economic resilience and national security. Concerns around tensions between China and Taiwan further underscore the risks of relying heavily on foreign suppliers.
Koike said the company wants to create “powerful” products with “great new value” made in Japan once again. For the government, Rapidus represents a high-stakes attempt to rebuild a domestic ecosystem capable of supplying advanced chips and restoring Japan’s broader technological strength.
Some analysts say the project may be Japan’s best opportunity to become competitive again — and possibly re-emerge as a formidable player in the global semiconductor market.
Featured image credits: Zion C via Unsplash
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