The world's leading chip manufacturing giant 'reaches out' to Japan, realizing its plan to expand operations

Taiwan Semiconductor Manufacturing Corporation (TSMC) has inaugurated its first factory in Japan, paving the way for it to start producing auto- and smartphone-related chips for top Japanese customers Sony and Renesas later this year.

Công ty Sản xuất Chất bán dẫn Đài Loan đã khai trương nhà máy tại Kumamoto, Nhật Bản vào ngày 24 tháng 2. (Nguồn: Nikkei Asia)

Semiconductor manufacturing corporation TSMC opened a factory in Kumamoto, Japan on February 24. (Source: Nikkei Asia)

According to Nikkei Asia , Japan's Minister of Economy, Trade and Industry Ken Saito and hundreds of Japanese chip industry leaders were present in Kumamoto for the opening ceremony on the afternoon of February 24, along with TSMC Chairman Mark Liu, CEO CC Wei and founder Morris Chang. The event took place in the context of the Japanese government's goal of strengthening the advanced semiconductor supply chain.

TSMC began construction of its second plant in Kumamoto Prefecture in southwestern Japan this year, with production expected to begin in late 2027. The first plant, located in the town of Kikuyo in Kumamoto, is expected to begin mass production of advanced semiconductors, including 12-nanometer chips used in automobiles and industrial equipment, in the fourth quarter of 2024.

Prime Minister Fumio Kishida said the Japanese government had also decided to provide financial support for the second plant. “Semiconductors are essential technologies for digitalization and decarbonization,” Kishida stressed, and Industry Minister Ken Saito confirmed that the subsidy for the second plant would reach 732 billion yen.

TSMC founder Morris Chang said the project would lead to a “renaissance” of Japan’s semiconductor manufacturing industry, emphasizing the importance of cooperation between Japan and Taiwan.

Total investment in the first plant is about 8.6 billion USD, of which the government subsidizes up to 476 billion yen ($3.2 billion).

Ahead of the factory's opening, TSMC announced it would double its investment in Japan to more than $20 billion, including a second chip manufacturing facility with new investor Toyota Motor.

Japan is trying to revive its semiconductor industry, once the world's number one, by offering generous subsidies to attract global chipmakers.

Japanese customers account for 6% of TSMC's total revenue of $69.3 billion in 2023. In addition, Japanese companies such as Tokyo Electron and Shin-Etsu Chemical play an important role in providing TSMC with equipment and materials essential for advanced chip manufacturing.

The Taiwanese chip manufacturing giant established the Japan Design Center in Ibaraki in 2019 to work closely with Japanese partners in researching and developing advanced packaging technology, which is considered a new "battlefield" in the chip manufacturing race.

By establishing operations in Japan, TSMC not only gains access to the country’s advanced semiconductor equipment and materials industries, but also strengthens partnerships with major technology companies in Japan and globally, said Counterpoint Research analyst Brady Wang. However, Wang noted that while Japan offers a relatively low-risk manufacturing environment, the challenge of addressing cultural differences remains a concern.

TSMC is also building factories in Arizona (USA) and in Dresden (Germany). According to Taiwanese media (China), by 2028, TSMC's overseas production is expected to account for about 20% of its total production capacity.

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