Japan has pledged a significant investment in its semiconductor industry by offering a USD 4.9 billion subsidy to Taiwan Semiconductor Manufacturing Company (TSMC) to build a second chip fabrication plant in the country. This move comes as TSMC, the world's leading chipmaker, celebrates the opening of its first Japanese factory on February 24, 2024.

Once both factories are operational, Kumamoto is expected to offer a total production capacity of more than 100,000 12-inch wafers per month. The overall investment will exceed USD 20 billion, with strong support from the Japanese government. The two fabs are expected to directly create more than 3,400 high-tech professional jobs.

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While partnering with TSMC offers immediate benefits, Japan is also looking to develop its domestic chipmaking capabilities. The country is simultaneously investing in Rapidus, a homegrown chip venture aiming for mass production of cutting-edge chips by 2027. This multi-pronged approach demonstrates Japan's commitment to both short-term solutions through partnerships and long-term self-sufficiency through domestic innovation.

TSMC's expansion into Japan is not limited to this latest development. The company is also expanding its operations in other countries, like the United States and Germany. This global diversification reflects the growing demand for advanced chips and the increasing importance of geographical spread in mitigating supply chain disruptions. For more information about semiconductor fabrication projects in Japan, explore our Japanese semiconductor database.

Objectives of the Grant

The primary objective of the grant is to secure a stable supply of advanced chips. Japan relies heavily on imported chips, particularly from TSMC. This grant incentivizes TSMC to expand production on Japanese soil, ensuring a reliable and readily available source of essential components for its domestic industries, especially those focused on advanced technologies like AI and autonomous vehicles.

By partnering with the world's leading chipmaker, Japan seeks to learn from TSMC's expertise and transfer valuable knowledge and skills to its domestic workforce. This knowledge transfer can fuel the growth of Japan's own semiconductor companies, ultimately aiming to reduce reliance on foreign chip suppliers in the long run.

This grant aims to address this by diversifying Japan's chip sourcing and reducing its dependence on a single supplier. Additionally, by fostering domestic chip production capabilities, Japan seeks to become more resilient to future potential supply chain disruptions.

Project Background 

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TSMC's foray into Kumamoto, Japan, began in 2019 with an invitation from the Japanese government to establish a fabrication facility (fab) in the region. This move aimed to reinvigorate Japan's semiconductor industry and leverage TSMC's expertise in cutting-edge chip production.

TSMCs First Kumamoto Project

TSMC's first project in Kumamoto, Japan, marks a significant chapter in the company's global expansion and Japan's quest for semiconductor self-sufficiency. Established in 2021 through a joint venture named "Japan Advanced Semiconductor Manufacturing" (JASM), the project culminated in the official opening of the fab in February 2024.

This first fab is slated for mass production later in 2024, focusing on "mature technology" chips like 12nm, which are crucial for automobiles and industrial equipment. The project represents a joint effort between TSMC, the Japanese government, and local partners like Sony and Denso. It is expected to create over 3,400 jobs and contribute to the revitalization of Japan's semiconductor industry. To learn more about the project, check out our Japanese Semiconductor Database.

Project Cost

The cost of the first TSMC project in Kumamoto was over USD 8.6 billion. The overall investment for JASM (Japanese Advanced Semiconductor Manufacturing) will exceed USD 20 billion. TSMC may invest around USD 13.5 billion to establish the second semiconductor fabrication facility. The two fabs are expected to directly create more than 3,400 high-tech professional jobs.

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