184 years of the company, became the secret weapon of the Japanese chip

Japanese construction company Kajima Corp. saw a surge in revenue and stock price thanks to the semiconductor factory construction boom. Now, this Tokyo-based company must overcome harsh conditions on the northern islands of Hokkaido to maintain this success.

As governments worldwide recognized the need for reliable silicon supply amid escalating geopolitical tensions, Kajima helped Japan swiftly kickstart the chip industry's development. The company spearheaded the rapid construction of a new manufacturing facility for TSMC on the southern island of Kyushu and completed the project before the U.S. government issued its first subsidy to TSMC and other chipmakers for American factories.

This construction boom propelled Kajima's growth, with its stock price soaring by 86% last year. However, the company's next project faces immense challenges: it's tasked with building a more advanced chip factory for government-backed Rapidus Corp., which faces severe complexities due to terrain characterized by snow, permafrost, and isolation from major population centers. Koichi Takano, project manager at Kajima Corp., vowed to complete the chip factory on schedule.

"An inexperienced team simply cannot handle this job," he said via Zoom from the construction site. "On the other hand, we have seen, touched, and manufactured the latest generation of cleanrooms for chip clients."

This isn't an exaggeration. Kajima has led the development of at least 10 chip factories over the past decade, where semiconductors are manufactured in so-called cleanrooms that filter out impurities from the air. This understated, 184-year-old company has quietly become Japan's secret weapon in building the semiconductor industry.

However, Rapidus will bring new challenges. The government-supported chip startup plans to start pilot production lines next year before mass-producing 2-nanometer semiconductors in 2027. Kajima began construction of the factory in September and must complete about half of the factory construction by the end of this year so that chip manufacturing equipment suppliers like ASML Holding NV can start installing from December.

Meanwhile, construction costs in Hokkaido are skyrocketing. Competition for workers intensifies due to longstanding labor shortages and stringent workplace regulations. Ski resorts on the island, including the renowned Niseko ski resort, are also riding their own construction wave. Material and heavy equipment prices rise due to the weak yen and Russia's war in Ukraine.

The squeeze has hampered developments elsewhere. Yodo Bridge Holdings Co. abandoned plans to build a luxury hotel in the Sapporo metropolis, while Hokkaido Railway Company postponed its rebuilding plans. In Niseko, real estate developers have halted new projects due to soaring costs.

Rapidus shows no signs of slowing down. While construction projects in snowy areas typically halt during winter, Kajima hasn't stopped for a day. Instead, they've covered vast areas of the 5.29-hectare site with tents to shield the soil from snow and used heaters and fans to keep the entire area warm for construction to continue. Low temperatures pose numerous complications, including risks of damage when concrete dries.

Kajima has its employees working around the clock, with the cost of having employees work nights and weekends being at least 25% higher. The company has also made special arrangements, hiring local firms to clear snow from roads around the construction site before workers arrive at 6 a.m.

Denzai KK, which provides cranes for construction sites, says Kajima made it clear from the outset that progress takes precedence over cost.

Kohki Uemura, CEO of Denzai, told Bloomberg, "They said the work should never stop no matter what." He estimates Kajima will pay 10% to 15% more for buying updated top-of-the-line cranes to minimize complications as much as possible.

Kajima's Takano acknowledges there are risks to completing the task by the December deadline, including shortages of workers or unexpected cost spikes, but he has outlined every step to completion—almost every scenario involves contingencies.

Kajima plans to employ as many as 4,500 workers and will soon start night shifts to expedite the process. The company primarily recruits workers from Hokkaido and will house them in nearby apartments.

A lesson learned from the Kumamoto project, Takano says, is that traffic jams were caused by workers driving their own cars to the construction site. Therefore, the team has arranged buses for employees and instructed them not to use their own vehicles.

At 59, Takano exudes confidence, having spent four decades tackling such complex projects, including constructing a chip factory for Kioxia Holdings Corp. in Mie in 2022. "The progress aligns perfectly with our plans," he says.

Takano says his personal goal is to pass on his expertise to the next generation of Kajima workers. His team has worked together for over twenty years, and they are nearing retirement.

"This is one of my last chances to pass the baton from the older generation to the younger generation," he says. "The Rapidus project is indeed very challenging. But we must consider ourselves fortunate to experience it."