Japanese semiconductor startup Rapidus Corp. is seeking to raise ¥100 billion ($696 million) through new equity financing, targeting both existing and new investors. The funds are aimed at bolstering its efforts in chip development and production.
Rapidus has already approached its current shareholders—including industry giants like Toyota Motor Corp., Sony Group Corp., SoftBank Corp., and MUFG Bank—seeking to secure ¥80 billion from them, according to individuals familiar with the situation. In addition, the startup is aiming for ¥5 billion investments each from Mizuho Bank and Sumitomo Mitsui Banking Corp., along with another ¥10 billion from the Development Bank of Japan.
The capital raised will help finance the construction of Rapidus’s advanced semiconductor foundry in Hokkaido, complementing billions of dollars in government subsidies the company is slated to receive. Discussions with shareholders and potential investors are ongoing, with Rapidus requesting responses by the end of this month, said the sources, who preferred to remain anonymous as the talks are confidential.
Originally, Rapidus had considered taking out a ¥100 billion bank loan to fund its operations. However, due to the company’s current pre-commercialization phase, executives opted for equity financing instead. While a loan remains a possibility down the line, Rapidus is prioritizing equity investments at this stage to maintain financial flexibility.
Representatives from MUFG Bank, Mizuho Bank, and Sumitomo Mitsui Banking Corp. declined to comment on the fundraising efforts. A Rapidus spokesperson confirmed that multiple financing options are being explored but did not provide further details.
Founded in 2022, Rapidus aims to mass-produce next-generation semiconductors by 2027, positioning itself as a direct competitor to Taiwan Semiconductor Manufacturing Co. (TSMC), the industry leader. However, executives at Rapidus and officials from Japan’s Ministry of Economy, Trade and Industry (METI) acknowledge that achieving this ambitious goal will require sustained, long-term investment. The Japanese government has already pledged as much as ¥920 billion in subsidies, and Economy Minister Ken Saito has indicated that additional legislation is in the works to allow direct government investment in the startup.
Despite the government’s backing, raising private sector capital has proven challenging for Rapidus. As the company continues its push toward chip development, it remains dependent on private and public investments to meet its long-term objectives.
Analysis:
Rapidus’s quest for ¥100 billion in funding signals the immense capital requirements of competing in the global semiconductor industry. This funding will directly support the construction of a high-tech foundry in Hokkaido, Japan, which could position Rapidus as a critical player in the semiconductor race—particularly as the industry grapples with supply chain bottlenecks and geopolitical tensions.
For investors, this presents both an opportunity and a risk. If Rapidus succeeds, early backers could see significant returns on their investment, especially given the increasing demand for next-generation chips across industries like automotive, technology, and telecommunications. However, the startup is still in its pre-commercial phase, meaning it will take years before investors could see tangible returns.
The Japanese government’s backing through substantial subsidies highlights the strategic importance of Rapidus in bolstering Japan’s position in the global semiconductor industry. Still, the startup’s reliance on both public and private capital underscores the challenges of developing such a capital-intensive business in a highly competitive landscape.
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