In a cleanroom in Chitose, Hokkaido, a Dutch lithography machine has been patterning wafers since April 2025. It is the NXE:3800E from ASML, the first mass-production EUV system installed in Japan, delivered to Rapidus in December 2024. IEEE Spectrum reported it cost over $300 million, one of more than 200 leading-edge tools in the building. On 18 July 2025, Rapidus said its 2nm transistors were working.
That is the Rapidus 2nm line. Seven weeks before it hit that milestone, Japan had passed its AI Promotion Act, a national AI law with no penalties. Both things are true, and they fit together.
As one recent mapping of the region put it, Japan is “one of the few countries with a credible full-stack AI story: Rapidus on 2nm silicon, Sakana AI and Preferred Networks on models.” The software layer is allowed to move lightly precisely because the physical foundation is being rebuilt with heavy state support.
Why Does Japan’s AI Promotion Act Carry Zero Fines?
Bird & Bird notes that the Act on Promotion of Research and Development, and Utilization of AI-related Technology was enacted on 28 May 2025 and took full effect on 1 September 2025. There are no fines and no criminal penalties. The government can investigate, issue guidance, and name companies that refuse to cooperate. That is the whole toolkit.
Anything binding comes from laws that already existed: privacy, competition, IP, and product safety. CSIS describes the private-sector duties in the act as nonbinding “duties to endeavor”. Japan’s stated goal is to be the world’s most AI-friendly country. In December 2025, the Cabinet approved the AI Basic Plan.
Set that against the EU AI Act, which MRKT3.0 has covered in depth: risk tiers, administrative fines, and market surveillance. Two wealthy democracies, opposite instruments. The gap is not philosophy, instead it is a question of what each one actually controls.
How Do METI’s Export Controls Lock Up Sub-7nm Photoresist?
Hogan Lovells reported that from 23 July 2023, Japan’s Ministry of Economy, Trade and Industry (METI) required export licences for 23 types of advanced chipmaking equipment. The rules apply everywhere, with a lighter process for 42 partner countries. The list covers cleaning, deposition, thermal processing, lithography, etching, and inspection tools capable of making logic at 14nm and below. Tokyo Electron, SCREEN Holdings, Nikon, Advantest, and Disco were among the roughly ten firms most affected.
Then came the materials. In November 2025, METI added 12 core semiconductor materials to the control list, including high-end ArF and EUV photoresists, and restricted supply to 42 Chinese companies. Japan supplies all of the EUV photoresist used for chips below 7nm. Over 90% of the KrF and ArF photoresist in Chinese chip factories comes from Japan.
How Are Belgium and the Netherlands Inside the Rapidus 2nm Programme?
Leuven-based imec signed a cooperation agreement with Rapidus in December 2022, backed by the Government of Flanders and METI. Rapidus joined imec’s Core Partner Program in April 2023, which gives it access to imec’s technology, its 300mm pilot line, and its partner network. EUV lithography was named as a joint project from the start.
So the scanner in Chitose is Dutch, and the process research is Flemish. Meanwhile, ASML’s China revenue share has fallen from 49% in 2024 to the low twenties in 2026, reshaped by the same export-control alignment Japan belongs to. Europe’s arguments about turning research into industry are being settled in a Hokkaido factory.
What Are Japan’s Etch Recipes Worth?
The equipment and materials used to make these chips are worth stealing, and Taiwan treats their theft as a national-security crime.
On 27 April 2026, a Taiwanese court sentenced Chen Li-ming, a former TSMC engineer who had moved to Tokyo Electron’s Taiwan unit, to 10 years in prison. Prosecutors said he passed TSMC’s 2nm process data to help Tokyo Electron win more equipment orders; his employer’s Taiwan unit was fined NT$150 million, about $4.8 million, and four others were jailed for up to six years.
That case, and what it reveals about where Taiwan enforces, is the subject of a separate MRKT3.0 piece. What matters here is the target. Tokyo Electron builds the etch and deposition tools a 2nm line depends on, and the process knowledge behind them is exactly what Japan is now trying to run at scale.
Can Rapidus 2nm Avoid Elpida’s Fate?
The money has moved fast enough that older figures are already wrong. In November 2025, METI said it would add ¥1 trillion across fiscal 2026-27, bringing total government support to ¥2.9 trillion. In April 2026 it went further, approving another ¥631.5 billion in development funding for fiscal 2026 and lifting cumulative R&D support to about ¥2.35 trillion, with total support now projected to pass ¥3 trillion by FY2027. Rapidus told METI it expects to turn an operating profit around FY2030 and to list in FY2031. Total investment should pass ¥7 trillion. Its buildings and equipment are owned by NEDO and leased back.
In February 2026, Rapidus closed a ¥267.6 billion round: ¥100 billion from METI’s IPA and ¥167.6 billion from 32 firms, including Canon, Fujitsu, NTT, SoftBank, and Sony. A further ¥150 billion in June 2026 took total funding to ¥424.95 billion. All of it sits within METI’s framework of more than ¥10 trillion in public support through FY2030, aimed at attracting ¥50 trillion more.
Japan says it fell behind in AI. A promotional law, combined with substantial capital, is a reasonable strategy for a country whose strength is manufacturing. Rapidus is not chasing volume either, its RUMS model targets a 50-day wafer turnaround, down from the typical 120 days, aimed at custom designers who need speed.
The case against it is also sound. Japan has not built leading-edge logic in years, and 2nm is the steepest step in the plan. State-backed Japanese chip champions have failed before, and Elpida’s 2012 bankruptcy followed years of public funding.
Rapidus itself treats 2026 as the year the pilot line stabilises and customers commit to designs. The transistor demo is done; the number that settles this is 2027, when a paying customer either commits a design to the Chitose line or does not. Japan has staked more than ¥7 trillion and its claim to leading-edge logic on that single answer. No AI statute, permissive or otherwise, will decide it. The factory will.
Author: Ayanfe Fakunle
See Also:
Asia’s AI Rulebook: How Asia Regulates AI in 2026
How Does China Regulate AI in 2026? Beijing’s Rulebook Without a Single Comprehensive Law
TSMC Spies Got 10 Years. Taiwan’s AI Basic Act Has No Penalties at All
