Can an island of flowers become a global chip hub?

Summary

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Podcast Summary: Business Daily (BBC World Service)

Episode: Can an island of flowers become a global chip hub?

Date: January 22, 2026
Host: Suran Janathewari

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Episode Overview

In this episode, Suran Janathewari explores Japan's bold effort to transform Hokkaido—an island known for agriculture and scenic blooms—into a world-leading hub for semiconductor manufacturing. The podcast investigates why Japan lost its edge in chipmaking, the challenges in the nation’s efforts to reclaim its tech leadership, and whether this ambitious government-backed initiative can compete with industry giants like Taiwan, South Korea, and the US.

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Key Discussion Points & Insights

1. Japan’s Lost Tech Supremacy

• In the 1970s and 80s, Japan led the world in electronics and semiconductors (e.g., the iconic Sony Walkman launch in 1979) (03:20).
• Japan's share of global chip production fell from over 50% to just above 10% today (06:50).

2. The Hokkaido Gamble: New Hub for Chips

• The Japanese government is investing $12 billion in Hokkaido's infrastructure to support the semiconductor boom (05:16).
• Hokkaido, famous for lavender fields and ski resorts, is seeing a tech transformation with the construction of chip plants, universities, and research centers.

3. Rapidus: The Flag-bearer

• Atsuyoshi Koike, CEO of Rapidus, explains the company’s mission and what sets it apart: "We are faster than other companies... we can provide the customer with the 2 nanometer chip, maybe two or three times faster than other competitors." (04:42, 06:33)
• Rapidus aims to start mass production of cutting-edge 2nm chips by 2027; thus far, only TSMC, Samsung, and Intel have achieved similar technology.

4. Why Did Japan Fall Behind?

• Prof. Yoyuki Yoshino (Keio University) cites failed negotiations with the US in the 1980s, technology transfer to rivals (e.g. Taiwan, South Korea), poor English skills, and static R&D funding as key factors (07:11, 08:45).
  • Quote: "Japanese people are not so good at speaking English compared to other countries. Even though their technologies are good, but they could not explain to the overseas market what kind of superiority they have." (07:40)
• Japan’s research & tech budget stagnated for 20 years, while a surging elderly population has redirected government and corporate funds into social welfare over innovation (12:37).

5. The Workforce Crunch

• Japan will face a shortage of about 40,000 chip engineers (14:59).
• Rapidus is working with Hokkaido University to train new talent but expects to rely heavily on foreign workers.
  • Quote (Koike): "People from all over the world need to work together... to educate talent for the semiconductor industry." (16:10)
• Social resistance to foreign workers persists amid changing workforce needs.

6. National Security & Global Supply Chains

• The chip race is not just economic but strategic: ensuring domestic production to offset risks from global supply chain shocks and geopolitical tensions, especially involving China and Taiwan (17:40).
  • Quote (Koike): "Advanced chips are absolutely essential for national security... we want to collaborate with customers on products that enrich their lives." (18:50)

7. Competition, Foreign Investment, and Challenges

• TSMC, Micron, Samsung, and other foreign players are expanding chip facilities in Japan, particularly in Kyushu, with government subsidies (16:37).
  • Local economies benefit: supplier networks, wages, infrastructure, and services all see growth.
• Koike repeatedly stresses "speed" as Rapidus’s key advantage over established giants; still, experts note that government financing may not be enough, and achieving necessary yields and quality will be tough (19:03).

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Notable Quotes & Memorable Moments

• Atsuyoshi Koike, Rapidus CEO:

  • “Semiconductors are very essential, a core of all other industrial sectors. For that purpose, I came up with one great technology: Speed. We are faster than other companies.” (04:42)
  • “We can produce and deliver chips three to four times faster.” (17:23)
  • “Advanced chips are absolutely essential for national security.” (18:50)

• Prof. Yoyuki Yoshino, Keio University:

  • “Japanese people are not so good at speaking English compared to other countries. Even though their technologies are good, but they could not explain to the overseas market what kind of superiority they have. So I think language problem is another weakness for Japanese companies.” (07:40)
  • “Japanese debt is one of the largest debt to GDP ratio in the world mainly because of aging population. More than one third of our budget are allocated to social welfare.” (12:37)
  • “If we just stick into the domestic market, the market is shrinking. We have to look at overseas market.” (13:59)

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Timestamps for Important Segments

• 01:19 — Introduction & overview of Hokkaido’s transformation
• 04:42 — Rapidus CEO Koike: Japan’s chip industry history & ambitions
• 05:16 — Government investment; partnerships with IBM, Toyota, Sony, SoftBank
• 06:50 — Prof. Yoshino on Japan's decline and its causes
• 08:45 — Role of US-Japan trade conflict and technology exodus
• 12:37 — Impact of aging population on R&D and innovation
• 14:59 — Workforce shortage and need for foreign engineers
• 16:37 — TSMC’s investment in Kyushu; impact on local economies
• 17:23 — Rapidus’s strategy: speed as a competitive edge
• 17:40 — Host on national security and the strategic importance of chipmaking
• 18:50 — Koike on national security and product innovation
• 19:03 — Assessment of risks, funding gaps, and competitive challenge

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Conclusion

Japan’s multi-billion dollar bet to transform Hokkaido into a global semiconductor center showcases a nationwide resolve to reclaim technological leadership. While Rapidus and its government backers highlight “speed” and strategic alliances as their main weapons, the episode underscores the enormity of hurdles: entrenched international competition, a shortage of specialist engineers, internal resistance to foreign labor, and lingering legacies of underinvestment in innovation. Success could mean not just restoring Japan’s chip-making clout, but also securing the country’s place in a tense geopolitical landscape where control of technology equates to national security and economic power.

Transcript

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[Suran Janathewari]

Hello, welcome to Business Daily from the BBC World Service. Hi, I'm Suran Janathewari. Today, Japan's bid to turn an island of flowers into a global chip hub. The island of Hokkaido, the northernmost of Japan's main islands, has long been an agricultural powerhouse. Now the government is investing billions to turn it into a global hub for advanced semiconductors. It's part of Japan's boldest industrial push in a generation. But can the country revive its tech supremacy?

[Atsuyoshi Koike]

They call them the lost decades. While we remain strong in manufacturing, we've fallen behind in semiconductors.

[Suran Janathewari]

We'll hear from the man who heads Rapidus, the company at the heart of this ambitious plan to reboot Japan's chip making capabilities.

[Professor Yoyuki Yoshino]

Budget to education, budget on research and development and technologies has been kept only the same level in these 20 years.

[Suran Janathewari]

Why has Tokyo been so slow to invest in these industries? And what challenges lie ahead for the economy more broadly as the government tries to bring about a chip renaissance? All coming up in today's Business Daily.

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[Suran Janathewari]

It's 1979 and the Sony Walkman has just burst onto the scene. For the first time ever, people could walk, take the train, exercise with music in their ears. It was a real moment for Japanese tech brilliance and paved the way for the ipod and then today's smartphones. When Japan led the world in electronics, people used to come here to Akihabara in Tokyo from all over the world to buy the most cutting edge gadgets. But in recent years, Japan has fallen behind in innovation. And that means as China, South Korea, Taiwan battle out to make the most advanced semiconductors, Japan has a lot of catching up to do. The northern island of Hokkaido is where the Japanese government is making its boldest bid yet to reclaim that lead. Hokkaido is a place of two extremes, a wonderland of ski resorts and ice sculpture festivals in the winter, and in the summer, fields bloom with bands of lavender, poppies and sunflowers. These days, cranes are popping up across the island, building factories, research centers and universities focused on technology. At the heart of the plan is a startup called rapidus. I sat down with the CEO of the company, Atsuyoshi Koike, next door to the company's chip Fab, or fabrication plant, where circuits and microchips will be produced once construction has finished. Thank you so much for talking to the BBC. First, can you tell me why you decided to start Rapidus?

[Atsuyoshi Koike]

Back in the 1990s, the Japanese semiconductor industry was booming, and many of the chip makers in Japan were very active. Unfortunately, over the past 20, 30 years, the sector lost its power. Semiconductors are very essential, a core of all other industrial sectors. For that purpose, I came up with one great technology Speed. We are faster than other companies.

[Suran Janathewari]

I'm standing in a vast plot opposite the new Chitose airport in Hokkaido, and for several years now, a number of red construction cranes have been working to build Rapidus for fab. Now security is really tight. I'm not allowed to go inside at all because it is under construction. But Atsuyoshi Koike is very excited about the FAB that he designed himself. And the message he wants to send is making semiconductors here in Hokkaido and bringing them to the world. Tokyo has committed about $12 billion into Rapidus to help build the fabric. The chipmaker is also partnering with IBM and has attracted investments from Toyota, Sony and SoftBank, among others. Earlier this year, Rapidis announced it had successfully produced two nanometer transistors, the most advanced chips yet. Only tsmc, Samsung and Intel have achieved such a feat. Mass production is planned for 2027, a timeline Mr. Koiki told me that the company is on track to meet.

[Atsuyoshi Koike]

What is unique to us is speed. We are very confident in our speed. We are faster than any others and we can provide the customer with the 2 nanometer chip, maybe two or three times faster. Than other competitors.

[Suran Janathewari]

I wanted to find out more about why Japan fell behind in the battle for chips in the first place. Forty years ago, the country made more than half of the world's semiconductors. Today it produces just over 10%. Professor Yoyuki Yoshino is professor emeritus in economics at Keio University in Tokyo.

[Professor Yoyuki Yoshino]

I think first the technological progress had been made in many other countries. And in those days after World War II, everything was produced by within manufacturing process. However, nowadays chips and so on that is very much easily copied and then produced. So I think the production process has been entirely changed 20 years ago. And right now then it is much easier for other countries to utilize those new technologies rather than producing by themselves. So that make Japanese companies weaker compared to others. And at the same time Japanese people are not so good at speaking English compared to other countries. Then it happened. Even though their technologies are good, but they could not explain to the overseas market what kind of superiority they have. So I think language problem is another weakness for Japanese companies.

[Suran Janathewari]

I mean, what a lot of experts say about Taiwan and South Korea. One of the reasons that they've become so good in especially in chip production is because of government subsidies and government investment is did the Japanese government drop the ball in one sense with regard to compared to the likes of Taiwan and South Korea.

[Professor Yoyuki Yoshino]

I think several years ago there was a fight between United States and Japan. Japan was very strong in those chips then US government was not happy. Japan dominating those chip market. So in the negotiation we didn't do very well. So that Japanese technology has been transferred Taiwan and South Korea and and other regions. So that's why they became stronger and Japanese company became weaker. However, we are going to rebuild it again. But that competition is severe and technologies becomes much, much faster to transfer without going to making some products one to another. So I think competition is very hard. However, Japan had a chance to come up with those levels and exceed those speeds. One is looking at the market very well and secondly the demands for their changing chips because existing chips will become old. So we have to keep up with the progress and that could be possible for Japanese engineers.

[Suran Janathewari]

But Rapidis CEO Atsuyoshi Koike says the Japanese government's mentality has changed.

[Atsuyoshi Koike]

They call them the lost decades. While we remain strong in manufacturing, we've fallen behind in semiconductors. The national and local governments are backing a revival with support from other major Japanese companies. We want to deliver powerful high value products from Japan again.

[Suran Janathewari]

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[Suran Janathewari]

I'm Suran Janathewari in Japan exploring the country's bid to become a global hub for the semiconductor chip market and regain its place as world leader in tech. At Tokyo's Shinagawa station, thousands of people are heading to work. Japan's workforce is shrinking while the number of elderly citizens continues to surge. That's defined the national budget for years and is one of the reasons for slowing growth. Here is Professor Yoshino again.

[Professor Yoyuki Yoshino]

Japanese debt is one of the largest debt to GDP ratio in the world mainly because of aging population. More than one third of our budget are allocated to social welfare. On the other hand, budget to education, budget on research and development and technologies has been kept only the same level in these 20 years. Japan used to have a very strong research and development and technological progress partly because coming from government and another part came from private sector. However, because of our aging population, huge amount of money of the governments are now headed to elderly people even for the company. Company has their own pension system. Then those retired People has to be supported by companies pensions. So company is spending a lot to elderly and retired people. So that reduces the research and development, both private sector and government sectors.

[Suran Janathewari]

Yeah, I mean, given the challenges in the economy, how do you sort of balance everything and prevent Japan sort of investing and trying to build these companies up, but then falling behind in the air race? For example, going forward, when the Japanese.

[Professor Yoyuki Yoshino]

Population were young, Japan was very strong because huge demands from young people came came from then. New technology has been developed to match those demands. However, we are now facing with aging population, elderly people consume less. They are not so much innovative ideas. Then if we just stick into the domestic market market is shrinking. We have to look at overseas market. However, overseas markets are sometimes different from Japanese market. Japanese consumers prefer high price but better quality. But some of the markets are medium quality but lower prices. And Japanese company has to know each market, what are their preferences in order to make our Japanese products much more available in overseas. Without that, Japanese company will keep on shrinking. So that's why we need to develop overseas market.

[Suran Janathewari]

Japan also faces a severe shortage of semiconductor engineers, an estimated 40,000 people in the coming years. RAPIDIS is partnering with Hokkaido University and others to train new workers. But CEO Atsuyoshi Koike agrees it will have to rely heavily on foreigners at a time when public support for workers coming into the country from overseas is low. Is Japan ready for this influx of foreign talent? Your leadership race just laid bare a lot of feelings and attitudes towards foreigners coming and working in Japan.

[Atsuyoshi Koike]

I think that is a very common thing. And we are very confident that people from all over the world will join us at Rapid Desk.

[Suran Janathewari]

Is it a frustration? I mean, you talked about the lack of investment in the industry, but could the government have done something in order to educate more engineers, especially in the field of chip production?

[Atsuyoshi Koike]

It's a shared responsibility, not just Japan. People from all over the world need to work together. Universities need to work together to establish programs to educate talent for the semiconductor industry in Europe, America. The industry and companies all need to work together to take on new challenges for semiconductor technology.

[Suran Janathewari]

Open this doors up. In February 2024, Taiwan's TSMC opened a chip plant on the southwestern Japanese island of Kyushu. It's the other part of Tokyo's plan, attracting foreign players into the country to make chips. Micron, Samsung and other domestic companies are using government funds to expand their presence too. The expansion has transformed the local economy, attracting suppliers, raising wages and leading to infrastructure and service developments. Rapidus CEO Atsuyoshi Koike again, can a startup take on global chip giants.

[Atsuyoshi Koike]

TSMC leads globally, followed by intel and Samsung. Our age is speed. We can produce and deliver chips three to four times faster.

[Suran Janathewari]

Imagine a fridge that scans your food so you always know what you have on hand. Do less, live more welcome to Bespoke AI at Japan's largest electronics show. C? Tec AI is the name of the game. From the smartphones in the palm of our hands to the refrigerators in our homes and the vehicles we use to get around. Global demand for the chips that power these systems is only going to surge. And Japan's companies, particularly its automakers, are are still reeling from pandemic era supply shocks. They're looking for more reliable domestically or regionally sourced production across the entire supply chain. Control over the supply of chips is increasingly being seen as a national security priority. With recent trade frictions and geopolitical tensions between China and Taiwan also a cause for concern. Atsuyoshi Koike says it's vital that sovereign nations have their own chip making capabilities.

[Atsuyoshi Koike]

One is national security advanced chips are absolutely essential for that. The other is that we want to collaborate with customers on products that enrich their lives.

[Suran Janathewari]

For Japan's government, investing in Rapidis is a high stakes gamble to revive its semiconductor industry and more broadly, its tech power. Experts say the government financing could still fall short of the amount that's needed. Plus, Rapidis faces a very real challenge in achieving the yield and quality in an incredibly competitive market, the very areas where Taiwan and South Korea have been pulled ahead. But the government is certainly changing its approach and making a concerted effort to become a formidable contender in the $600 billion race to supply the world's computer chips. Thank you for listening to this episode of Business Daily with me, Suran Janatawari. You can find more episodes just search for Business Daily wherever you get your podcasts.

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