IBM partners with new Japanese chip maker, Rapidus, to make advanced chips By Reuters

By Jane Lanhee Lee and Tim Kelly

OAKLAND, Calif./TOKYO (Reuters) – IBM Corp said on Tuesday it is partnering with Rapidus, a newly formed chip maker backed by the Japanese government, to help it manufacture the most advanced chips currently available.

The announcement comes as U.S.-China relations remain tense especially over chips, and Washington recently restricted Beijing’s access to advanced semiconductor technology. Japan, which has long lost its lead on chip manufacturing, is now rushing to catch up and ensure its carmakers and information technology companies do not run short of the key component.

Last month Japan said it will invest an initial 70 billion yen ($500 million) in Rapidus, a venture led by tech firms including Sony (NYSE:) Group Corp and NEC Corp. While that is small in the world of chip manufacturing where plants can cost tens of billions of dollars to build, sources say more investments are on the way.

International Business Machines (NYSE:) Corp’s director of research, Dario Gil, said the two companies will work together to manufacture IBM’s so-called 2-nanometer-node chips unveiled last year.

A “nanometer,” or one-billionth of a meter, in the chip industry now refers to a specific technology rather than the measurement. In general, the smaller the number that precedes the word “nanometer,” the more advanced the chip.

Asked if Japan could leapfrog ahead to manufacturing such advanced technology when its most advanced plant today makes a 40-nanometer chip, Gil said, “It’s not like you’re starting from scratch.”

“Japan has enormous strengths already in the semiconductor industry and from the perspective of materials and equipment are global leaders in that space,” he told Reuters ahead of the announcement. “The engineering and scientific expertise that is in Japan and this network of suppliers and partners around that is very rich and strong.”

IBM said as part of the agreement Rapidus scientists and engineers will work alongside IBM Japan and IBM researchers at the Albany NanoTech Complex in New York state.

The new plant will be in Japan, although the companies have yet to announce the exact location.