Rapidus Achieves 2-Nanometer Milestone in Japanese Chip-Making Revival

Rapidus, a $34 billion Japanese project, has achieved a milestone in its mission to restore the country's advanced chip-making capabilities. The company has successfully produced a 2-nanometer transistor and collected data to further refine the chipmaking process. However, details on the quality of the product and progress in attracting customers remain scarce.

Taiwan Semiconductor Manufacturing Company (TSMC) continues to solidify its position as the global leader in advanced semiconductor technology. The company's latest earnings report highlights significant advancements in its N2 process, which has shown profitability exceeding its N3 process [1]. This technological milestone underscores TSMC's ongoing pursuit of technological supremacy.

The N2 process, introduced by TSMC, offers substantial improvements over its predecessor, N3. It provides a 15% increase in clock speed, a 30% reduction in power consumption, and a 15% increase in density scaling compared to N3E. These advancements translate to a cost per transistor improvement of approximately 5% plus or minus 3% [3]. Analysts and industry experts have lauded TSMC's N2 technology, noting its critical role in the burgeoning AI super cycle. The N2 process is expected to be a key driver for TSMC's continued growth, particularly in the second half of 2025.

TSMC's stock has rallied 21.35% in the last 12 months and is up 18% year-to-date (YTD), reflecting investor confidence in the company's growth prospects. Analyst coverage has been overwhelmingly bullish, with a Strong Buy rating and an average 12-month price target of $231.63 [1]. Despite the strong performance, TSMC faces challenges such as U.S. tariffs and a strengthening Taiwan dollar. The company has already indicated that these factors may have an indirect impact on its gross margin, with a 1% appreciation in the Taiwan dollar reducing the margin by 0.4 percentage points [2].

In addition to its technological advancements, TSMC is expanding its global manufacturing capabilities. The company has initiated plans to construct its second chip factory in Japan during the second half of this year. The project has already begun with the excavation of an employee parking lot, marking the start of the construction phase. This development is part of TSMC's broader strategy to expand its global manufacturing capabilities, particularly in regions with high demand for advanced semiconductor technology [2].

The new factory will focus on producing 5 to 7 nanometer chips, which are at the cutting edge of technological advancements. These chips are crucial for supporting high-performance needs in smartphones and data centers. The construction of the second factory in Japan is set to commence in the latter half of this year, following the completion of the employee parking lot. This move is part of TSMC's ongoing efforts to enhance its production capabilities and ensure a steady supply of advanced semiconductor products to meet global demand [2].

Rapidus, Japan's government-backed startup, has also achieved a notable milestone in its mission to restore the country's advanced chip-making capabilities. The company has successfully produced the first 2-nanometer transistor in Japan and collected data to further refine the chipmaking process [3]. This development highlights the growing competition in the semiconductor industry and underscores the importance of continuous innovation.

In conclusion, TSMC's N2 process profitability exceeding its N3 process, along with its expansion plans in Japan, underscores the company's technological leadership and growth potential. As AI and other advanced technologies continue to drive demand for cutting-edge chips, TSMC is well-positioned to benefit from this trend. Investors and financial professionals should closely monitor TSMC's earnings call for further insights into the financial implications of this technological advancement.

References:
[1] https://www.marketbeat.com/instant-alerts/filing-adell-harriman-carpenter-inc-buys-14417-shares-of-taiwan-semiconductor-manufacturing-company-ltd-nysetsm-2025-07-05/
[2] https://www.ainvest.com/news/tsmc-build-chip-factory-japan-boosting-5-7-nanometer-production-2507/
[3] https://asia.nikkei.com/Business/Tech/Semiconductors/Japan-s-Rapidus-touts-2-nm-milestone-in-race-to-catch-TSMC-Samsung2