The race to build cheaper, faster AI chips is heating up, and Japan's Rapidus is positioning itself as the unexpected challenger to Taiwan Semiconductor Manufacturing Company (TSM)'s long-standing grip on the industry.
Breaking Down Rapidus's Cost-Cutting Play
Here's what makes this interesting: Rapidus has created a prototype interposer cut from a large glass substrate, specifically designed for AI-focused semiconductors. Think of it as a critical connector piece that helps AI chips communicate more efficiently. The company is aiming to start mass production in 2028, ramping up for what could become a serious challenge to Taiwan Semiconductor's dominance, according to a Wednesday report from Nikkei.
This isn't just talk. Back in January 2025, reports emerged that Rapidus was preparing to deliver 2-nanometer chip samples to Broadcom Inc. (AVGO). That's a significant customer to land, especially when you're trying to prove you can compete with the biggest names in the business.
The company's secret weapon? A combination of International Business Machines Corp (IBM)-backed technology and substantial government funding aimed at building a homegrown advanced chip manufacturing base in Japan. By July, Rapidus had already begun prototyping its 2-nanometer gate-all-around transistors at its IIM-1 foundry, with early wafers showing actual electrical performance. The roadmap calls for releasing a customer process kit in 2026 and launching mass production in 2027.
TSMC Isn't Standing Still
Meanwhile, Taiwan Semiconductor continues to reinforce its leadership position in 2-nanometer technology. The company is expanding manufacturing sites while improving power efficiency and performance specifically tailored for AI workloads. It's pairing the advanced node with its Chip-on-Wafer-on-Substrate packaging technology to handle larger and increasingly complex computing demands.
But here's where things get interesting for competitors like Rapidus: demand for cutting-edge capacity is tightening fast. Apple and Nvidia Corp. (NVDA) are securing much of Taiwan Semiconductor's most advanced 2-nanometer output, contributing to a supply crunch. That shortage is pushing rival chip designers to explore alternative foundries, which creates an opening for new players to enter the game.
Samsung and Intel Want Back In
Rapidus isn't the only company eyeing TSMC's throne. Samsung Electronics Co., Ltd. (SSNLF) is working to regain momentum at the 2-nanometer node by stabilizing yields and scaling production at its fabrication plants in the United States and South Korea. Those efforts are starting to pay off, with early customers signing up for processors and custom chips.
Intel Corp. (INTC) is also advancing its own 2-nanometer-class process as it seeks to restore its standing in the global foundry market. The company wants to compete more directly for advanced AI chip contracts after years of losing ground to Taiwan Semiconductor.
What we're watching is a fundamental shift in the semiconductor landscape. For years, TSMC has enjoyed near-total dominance in advanced chip manufacturing. But with AI driving unprecedented demand and supply constraints creating bottlenecks, the door is opening for well-funded challengers like Rapidus to carve out market share. Whether they can actually deliver at scale by 2027 or 2028 remains the billion-dollar question.
The stakes couldn't be higher. AI chip manufacturing represents the backbone of the next generation of computing, from data centers to smartphones. Whoever controls the production of these advanced chips essentially controls a critical piece of the global technology infrastructure.
TSM Price Action: Taiwan Semiconductor shares were up 0.53% at $288.38 during premarket trading on Wednesday.