Japan's industry ministry said Friday it is considering offering loan guarantees to Rapidus Corp. in its latest effort to help the state-backed chipmaker launch a domestic production line.
The Ministry of Economy, Trade and Industry is hoping such state guarantees will help the chip venture raise funds from private-sector banks, as the company estimates it needs about 5 trillion yen ($32 billion) to complete a plant in Hokkaido, northern Japan, to begin mass production of next-generation chips in 2027.
The ministry has already decided to offer 920 billion yen in subsidies to the company as a stable supply of chips -- a critical component in high-tech products -- is becoming increasingly important in ensuring economic security amid the growing rivalry between the United States and China.
The U.S. government and the European Union both provide generous financial aid to their local chip industry, so private-sector loans are vital in Japan as its fiscal health remains the worst among major developed countries. Japan is also saddled with increasing social security costs.
With the company hoping an initial public offering could also be a future option, the ministry said it will draw up a new support scheme by the end of the year.
Rapidus is currently constructing the new plant in Hokkaido to mass produce state-of-the-art 2 nanometer chips in cooperation with IBM Corp.
The chip manufacture was set up in 2022 by eight major Japanese companies including Toyota Motor Corp. and Sony Group Corp.
