Japan is building a huge chip factory – in a region outside the big cities that is known for its nature. With this project, the country wants to reshape its economic future and get involved in the global chip market.
November 24, 2025, 8:07 p.mNovember 24, 2025, 8:07 p.m
Hokkaido is not only known for pumpkin. The colorful flower fields in front of snow-capped mountain peaks serve as the backdrop for many Japanese films.
Life on Japan’s second-largest island, however, looks less romantic: the young population is moving to Tokyo or other economic centers in search of better salaries outside of agriculture, fishing and tourism.
Industrial offensive in the flower paradise.image: shutterstock
But the flower island will soon blossom technologically. All over the island, cranes rise into the sky, building factories, research centers and universities focused on technology. The goal? The island is to be transformed into a global center for semiconductors.
Geopolitical hedging
Domestic chip production is increasingly seen as a national security priority, especially given geopolitical tensions between China and Taiwan. In addition, the demand for chips continues to grow, driven by digitalization, the boom in artificial intelligence and advancing automation.
Until 2030 The semiconductor industry could reach $1 trillion in sales. This corresponds to annual growth of around six percent, as the consulting firm Deloitte estimates in a report.
At the center of the initiative is the Japanese semiconductor manufacturer Rapidus, which is supported by the government with billions of dollars in subsidies and also supported by companies such as Toyota, SoftBank and Sony.
The goal is ambitious: Rapidus wants to be the first company in the world to mass produce the 2 nm microchip – also known as an AI chip – as it is particularly important for future AI applications. Taiwan currently dominates the global market. Around 60 percent of all microchips come from the small island state.
Japan is racing to catch up with billions
The location in the natural paradise for hikers and skiers was deliberately chosen: Unlike large cities such as Tokyo or Osaka, Hokkaido offers a lower risk of earthquakes. And there is enough space for a work of this size: the site is larger than the 46 hectare Disneyland in Tokyo, the building exceeds the 56 meter high Tokyo Dome, and more steel is used in the construction than the Tokyo Skytree – over 36,000 tons.
Commercial semiconductor production is scheduled to begin in 2027. If Japan succeeds in turning Hokkaido into a “Silicon Valley” – or rather a “Hokkaido Valley” – the country could become a new player in the $600 billion race for global chip supplies.