IBM backs Japanese chip start-up it thinks is vital

(Bloomberg) – International Business Machines Corp. prioritizes support for Japanese chipmaking startup Rapidus Corp., with an executive citing the burgeoning foundry business as critical to securing long-term global supplies.

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Rapidus, a company backed by some of Japan's largest electronics companies, is translating IBM's 2-nanometer chip design into production-ready silicon and aims to mass-produce such chips in the second half of this decade. The most advanced semiconductors today are built on the larger 3nm node.

“When it comes to 2nm technology, we focus our efforts on Rapidus and invest a lot of resources in this project, even sacrificing some capacity that we could have used for other research,” said Norishige Morimoto, Chief Technology Officer from IBM Japan, told Bloomberg News in an interview. “We want Rapidus to be successful. We want it to contribute to a stable supply of chips that we and the world need.”

Rapidus is a quasi-public project launched last year as a project to expand Japan's local chip manufacturing capabilities at a time of rising geopolitical tensions and protectionism. It enjoys government support and is led by semiconductor supply chain veterans, including Tetsuro Higashi, former chairman of Tokyo Electron Ltd., and Atsuyoshi Koike, former Japanese president of Western Digital Corp.

The daunting task ahead of them is to create a world-class chip manufacturing facility that produces silicon for external customers, to catch up with industry leader Taiwan Semiconductor Manufacturing Co. within a few years. The duo has investments from companies such as Toyota Motor Corp., Sony Group Corp. and Nippon Telegraph & Telephone Corp. receive. Rapidus is collaborating with IBM and the Belgium-based microelectronics research center IMEC.

Rapidus engineers have been dispatched to IBM's Albany NanoTech Complex to design 2nm mass production lines while the Hokkaido factory is being built, speeding up the development process. The Japanese company expects to invest 5 trillion yen ($35 billion) in its 2nm project, which is about the same as annual spending by TSMC and leading chipmaker Samsung Electronics Co.

Read more: Chip industry veteran wants to help Japan build its own TSMC

IBM would be open to helping Rapidus secure more deals with major chip companies. “We will not rule out any options as long as they meet our business needs,” Morimoto said. IBM also provides chip manufacturing technology for Samsung's foundry division.

“Rapidus and Samsung share the same platform as they both use IBM technology and there is a very good chance that the two will have a win-win partnership as their business models are quite different,” said Omdia analyst Akira Minamikawa.

Read more: Japan's Rapidus seeks billions of dollars to restart chip sector

IBM provides the Rapidus key process technology that enables 2nm chip nodes and beyond, using a new type of transistor composition called Nanosheet. The move to such advanced geometries is a huge leap from Japan's existing capacity trading in more mature nodes such as 40nm nodes, but Morimoto is confident the country has an extensive roster of experienced chip engineers.

Demand for semiconductors is expected to continue growing as the post-COVID recovery takes hold and the artificial intelligence boom fuels the need for more storage and processing power.

According to Inna Skvortsova, market analyst at industry association SEMI, global sales are expected to reach $1 trillion by 2030 and double within a decade.

Currently, only Samsung and TSMC can make the most advanced chips, and there's widespread interest — from Washington to Beijing to Brussels — to make supply sources even more redundant. Ideally, Rapidus would offer a third option and should also be welcomed by industry leaders struggling to meet demand, Morimoto said.

“We know from our own experience that delivering the latest generation of chips cannot be done by one company alone,” he said. “Both TSMC and Samsung will welcome Rapidus' entry into the state-of-the-art chipmaker's club as they currently make customers wait. It would be no problem for Rapidus to take a few orders from them.”

TSMC Chairman Mark Liu said he doesn't see Rapidus as a competitor as the Japanese chipmaker will focus on nurturing engineering talent.

– With support from Takahiko Hyuga and Debby Wu.

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