Business

Japan Must Focus on Niches to Revive Chip Prowess Says NTT Boss
By Reuters | 15 Dec, 2025

Japan's government-backed Rapidus chipmaker is eyeing a focus on few selected niches instead of trying to compete at scale with TSMC and Samsung.

Japan needs to take a niche approach to chip manufacturing - rather than trying to compete on scale and price - as it aims to revive its once-mighty chip industry, the chairman of telecom heavyweight NTT told Reuters in an interview.

NTT is one of a number of major Japanese corporations invested in Rapidus, the government-backed chipmaker that plans to start mass production of advanced semiconductors in 2027. Set up in 2022, Rapidus is central to the government's $65 billion plan to boost the chip and artificial intelligence industries that was unveiled last year.

Japan's top three banks plan to lend around 2 trillion yen  ($12.9 billion) to Rapidus, Reuters reported last week. 

In the 1980s, Japan was one of the world's most dominant players in chips, a position it has since ceded to rivals in Taiwan and South Korea. Japan's industry lost its competitive edge by chasing low-cost, high-volume production, something it needs to avoid this time around, NTT's Jun Sawada said.

"In terms of economies of scale, we can't beat Taiwan's TSMC or South Korea's Samsung Electronics," Sawada said in an interview last week. "We should aim for high mix, low volume," he said, referring to a strategy that some chipmakers use to produce a wide variety of highly specialised chips at lower volumes, allowing them to charge more for niche products.

Japan's plan to revive its chip industry is in tandem with Washington's drive to ensure stability of the chip supply chain in response to China's rapid advances in technology.

NTT would like to see Rapidus adopt its IOWN technology, which uses light to transmit data, and is faster and consumes less power than standard technology, Sawada said.

Sawada, who chaired the Japan-U.S. Business Council until October, said U.S. President Donald Trump's policies also had positives for Japan. While there has been much hand-wringing in Japan about U.S. tariffs, Sawada pointed to Japan's pledge this year to invest $550 billion in the United States as an opportunity.

"You can view it positively. While tariffs are high, Japan is able to get into the market and take market share," he said.

($1 = 155.0700 yen)

(Reporting by Yukiko Toyoda and Kentaro Okasaka; Writing by David Dolan; Editing by Kate Mayberry)