Japan has already embarked on ambitious growth on its way to high semiconductor production, and a huge financial investment has been added now.
An up-and-comer corporation, Rapidus Corporation, which was on the brink of becoming a rival to the global giants, obtained $267.6 billion Chinese yuan $1.7 billion dollars in investment funds by means of the national government and 32 leading domestic firms, such as Sony, Toyota, and SoftBank.
Officially announced on 27 February 2026, this investment forms the basis of prospects of initiating mass production of 2-nanometer chips by March 2028, which has previously turned out to be a milestone that sceptics thought impossible.
Investment Surge Signals Confidence
The transaction will bring in 167.6 billion Chinese yuan from private investors, adding to the 200 billion yuan already secured from the government. An additional 150 billion yuan is expected in April.
This total investment is part of Prime Minister Sanae Takaichi’s 3 trillion-yen commitment to semiconductor production in Japan. Economy Minister Ryosei Akazawa noted that the private financing round was significantly oversubscribed, surpassing its 130-billion-yuan target and reflecting strong market confidence in Rapides.
There are investors such as Denso, NTT, Canon, Fujitsu, Kioxia, and Kyocera, which mix auto-tech manufacturing muscle. The government obtains a first 10% stake in voting shares and golden shares that have a veto right and conversion right in the case of distress.
Such a correlation combines the backing of the population with the risk sharing in the form of privatization, which would protect the economic stability of Japan in the context of the U.S.-China geopolitical conflict.
AI Boom Drives Demand
The CEO, Atsuyoshi Koike, stated that they are talking with over 60 companies that are planning to implement 2nm chips in artificial intelligence, robotics and edge computing.
In a briefing in Tokyo, Koike indicated that demand for state-of-the-art semiconductor technology has been growing like a runaway steam engine since the start of the year, especially in 2-nanometer nodes.
Rapidus will also consider moving to 1.4 and 1 nanometer technology in the future because generative artificial intelligence is growing, and worldwide investment in AI chips amounted to 45 billion in 2025 and will rise by 3 times by 2028, according to Gartner.
The Japanese economy ministry has 400% more semiconductors. AI, with a 1.23 trillion budget. However, Takaichi, who is the Prime Minister, as noted, averts threats by saying that TSMC has dedicated itself to upgrading its Kumamoto plants that currently produce 12-nanometer chips and are planning to advance to advanced nodes in the near future.
Critical Outlook Ahead
Analytically, Rapidus has significant problems, as the leadership of 20 nm in the chip market is held by TSMC and Samsung, and they have a large volume of economies of scale.
However, 40% of advanced materials, including photoresists, are compared in Japan, giving a competitive advantage, and the never-ending nature of artificial intelligence may change the competitive front.
By 2030, Rapidus would have 5-10%. share of the estimated $200b advanced foundry market by 2028, based on IDC forecasts, should it be successful in its 2028 goals.
Due to the threat of sunk costs, failure would be an issue; on the other hand, success would strengthen supply chains that would reduce exposure to tariff regimes and political instability. The best way of measuring the viability of an operation is by monitoring the customer contractual obligations.