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Chip Maker TSMC eyes expansion in Japan

Taiwanese semiconductor company is already building big factory subsidized by Tokyo!

Taiwan Semiconductor Manufacturing Co. is considering expanding its production capacity in Japan, people familiar with the matter said, in what would be a move by the world’s largest contract chip maker to reduce geopolitical risk.

The Japanese government has signaled that it would like to expand in the country beyond a factory already under construction, but no decision has been made yet and TSMC is studying the feasibility, WSJ reports

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Japan is subsidizing the TSMC Factory

The Taiwanese company, which makes chips for a host of major electronics products including those of Apple Inc., is building its first chip-manufacturing plant in Japan, located on the southern island of Kyushu. The multibillion-dollar plant is subsidized by the Japanese government.

The semiconductor industry has been in upheaval since last year when widespread chip shortages snarled auto making and other industries. At the same time, the U.S. and allies such as Japan have grown concerned about the rise of the Chinese semiconductor industry and the concentration of chip making in Taiwan, a self-governing island that Beijing claims as part of its territory.

TSMC’s factory under construction in Japan is part of the response to these issues, boosting production capacity in a U.S. ally. The plant is set to focus on less-advanced chips commonly used in autos and components like sensors, and it is scheduled to ship products in late 2024. A company called Japan Advanced Semiconductor Manufacturing, majority-owned by TSMC, is building the plant.

Once a world leader in semiconductor manufacturing, Japan has fallen behind Taiwan and the U.S. Tokyo officials have called that a national-security concern and sought to locate more chip making in the country to support other manufacturers such as car makers that need chips.

Last December, Japanese lawmakers approved $5.2 billion, in funding to rebuild the domestic semiconductor industry, part of Tokyo’s goal to increase domestic chip revenue to the equivalent of nearly $100 billion by 2030.