Chip giant TSMC plans to construct a second chip plant in the Kumamoto Prefecture of Japan to manufacture 12nm chips by the end of 2026, Japanese media outlet Nikkan Kogyo Shimbun reported on Tuesday. TSMC will reportedly invest 1 trillion yen ($7.1 billion) for the second plant, which is expected to start construction in April 2024.
Why it matters: In recent years, the Japanese government has gradually realized the limitations of its own chip industry, especially with the world transitioning to EV and the automobile industry’s increasing demand for advanced chips. TSMC’s further expansion in Japan may make it eligible to receive huge subsidies from the local government, and improve the company’s production capacity by utilizing local water and power resources.
Details: In June, TSMC’s chairman Mark Liu revealed that the company was evaluating the possibility of another plant aimed at producing mature-process chips in Kumamoto Prefecture, near the company’s first facility.
- On June 9, Yasutoshi Nishimura, the Minister of Economy, Trade and Industry of Japan, responded to the news by saying that the Japanese government would consider providing financial aid to a potential second TSMC plant in Japan.
- In June, Sony CEO Terushi Shimizu told a round-table conference that TSMC’s first plant in Japan had been unable to fulfill an order for his firm, after receiving a large order from electric vehicle makers such as Honda. He also said that Sony has not yet decided to invest in the second plant.
- On June 30, at a press conference held in Yokohama Japan, Kevin Zhang, TSMC’s Senior Vice President, said the company did not rule out the possibility of manufacturing advanced process chips in Japan in the future.
- Last year, TSMC and Sony invested approximately $7 billion to build the first semiconductor factory in Kumamoto Prefecture, while the Japanese government decided to provide 476 billion yen ($3.38 billion) in subsidies.
- TSMC has already started the construction of its first plant in Japan and is targeting local production in 2024, according to the Nikkan Kogyo Shimbun report. Japan Advanced Semiconductor Manufacturing, a joint venture with TSMC, is in charge of Japan’s business operations, with Sony, Honda, and Denso all investing. According to TSMC, the first factory will produce 55,000 wafers a month by the end of 2024, using 12nm, 16nm, 22nm, and 28nm process technologies.
Context: Last December, TSMC announced it would increase its planned investment of $12 billion to $40 billion for two new factories in Arizona, US. For its US factories, the company plans to start producing 4nm chips in 2024 and 3nm chips in 2026, respectively.
- The US passed the CHIPS and Science Act last August to offer around $52 billion in incentives for US-based chip manufacturing.