Japanese govt. considering loan guarantees to chipmaker Rapidus

Japan's industry ministry is considering providing state loan guarantees to semiconductor maker Rapidus to help it procure funding.

The government hopes to submit the necessary bills to the Diet by the end of this year at the earliest.

It's unusual for the government to offer loan guarantees to a specific company.

Rapidus was established in 2022 with investors including Toyota Motor, telecom giant NTT and Sony Group.

The company is targeting domestic production of cutting-edge semiconductors for self-driving vehicles and artificial intelligence technology.

Rapidus is building a new plant in Hokkaido, northern Japan, aiming to start mass production around 2027.

So far, the government has decided to provide about 900 billion yen, or over 5.79 billion dollars, to the company.

To mass produce the chips, a huge amount of additional funding will be needed. But that has proven challenging, as it will take time to generate eventual sales.

The ministry plans to consider providing the loan guarantees as the firm has no record of obtaining loans from financial institutions.

However, the plan could trigger controversy, as the government may need to take on the loans if Rapidus ever becomes unable to repay them.