Rapidus represents Japan's best chance at getting back to the cutting-edge of chip-making. Image: Twitter

Rapidus, Japan’s advanced logic foundry venture company, has chosen Chitose as the site for a new 5 trillion yen (US$37 billion) semiconductor production facility, a move that will pull the island nation’s northernmost region more firmly into its technology supply chain.

Chitose, located 40 kilometers and 30 minutes by express train southeast of Sapporo on Japan’s northern island of Hokkaido, has cheap land, plenty of water, modern infrastructure, a world-class international airport and proximity to the seaport of Tomakomai.

Rapidus, established in August 2022, is backed by eight leading Japanese companies, namely Sony, Toyota and its group semiconductor maker Denso, NAND flash memory maker Kioxia, national telecom carrier NTT and telecom equipment maker NEC, investment firm Softbank and Mitsubishi UFJ, Japan’s largest bank. 

In December, Rapidus announced it had formed a partnership with America’s IBM to develop and implement IBM’s cutting-edge 2 nanometer (nm) chip-making technology.

The two firms aim to catch Taiwan’s TSMC, the world’s top logic foundry. TSMC is currently leading the race to produce the ever-smaller and increasingly sophisticated semiconductors that will power the technologies of the future.

In early January, at a meeting with US Secretary of Commerce Gina Raimondo and Japan’s Minister of Economy, Trade and Industry Yasutoshi Nishimura, Rapidus President Atsuyoshi Koike and IBM director of research Dario Gil announced that their companies would collaborate in the development of new markets for the high-performance logic chips that Rapidus plans to mass produce by the second half of the decade.

Rapidus President Atsuyoshi Koike (left) and Chairman Tetsuro Higashi hold a news conference. Image: Facebook

“This collaboration is critical to ensure a geographically balanced global supply chain of advanced semiconductors, built through a vibrant ecosystem of like-minded companies and nations,” Gil said. That’s corporate code for reducing dependence on TSMC and hedging against the potential for a supply chain-exploding conflict between Taiwan and mainland China.

However, there are certain potential drawbacks to the Rapidus-IBM plan. Hokkaido is currently the only major region of Japan without a semiconductor industry. A local supply chain and housing for first hundreds and then thousands of engineers and other workers and their families will thus have to be built almost from scratch.

Like the TSMC-Sony joint venture in Kumamoto, the Chitose foundry will not only be an investment in semiconductors but also work as a regional economic development program.

This was a conscious decision. As CEO Koike says: “We have chosen this site based on its mid- to long-term potential for global human resource exchange and ecosystem development. We hope to begin concrete discussions with Chitose City once the plan and budget are approved by the Japanese government.”

Rapidus is another big project for IBM in Japan, where it is also playing a leading role in the development of quantum computing through a consortium with the University of Tokyo, Keio University and several Japanese financial and industrial corporations.

IBM is no stranger to Japan: It began exporting there in 1925 and established its first subsidiary, IBM Japan, back in 1937.

Hokkaido is effectively Japan’s Scandinavia. Its population is almost as large as that of Denmark, Norway or Finland but its GDP is smaller due to a lower rate of industrialization.

Sweden has twice as many people. Denmark has more and better agricultural land. Unlike Norway, Hokkaido lacks oil and gas. Compared with Finland, Hokkaido does not have a large electronics industry. But Rapidus will soon change all that.

Sapporo is the home of Hokkaido University and the Hokkaido University of Science (formerly the Hokkaido Institute of Technology). Established in 1876, one year before the University of Tokyo, Hokkaido University was Japan’s first modern university. Rapidus employees from other parts of Japan will thus not be moving to the boondocks.

They will, however, have to get used to the cold. Blizzards from Siberia blow straight to Hokkaido across the Sea of Japan. Sakhalin is to the north and the Sea of Okhotsk, which freezes over in winter, is to the northeast.

On the other hand, both residents and visitors can enjoy great skiing at Niseko and other resorts, hot springs, mountains and lakes – that arguably rival those in Europe – and fields of flowers and lavender in the summer.

Sapporo City in Hokkaido, Japan. Photo: Wikimedia Commons.
Japan’s Scandinavia: Sapporo City in Hokkaido, Japan. Photo: Wikimedia Commons

The crab, salmon and other fish and shellfish from the northern ocean are world-renowned, while historical sites include Nikka Whiskey’s Yoichi distillery and the Sapporo Beer Museum.

One big difference between Hokkaido and the countries of Scandinavia is that Hokkaido has never been an independent state. Remnants of the feudal Tokugawa regime attempted to establish a Republic of Ezo (the old name for Hokkaido) in 1869 but were defeated by the armed forces of the new Meiji government.

The Empire of Japan went on to modernize Hokkaido with the help of American advisors. And now, 150 years later, IBM is helping Rapidus build what they hope will be a world-class, state-of-the-art semiconductor industry there.

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