TSMC japan

$4.9 Billion: TSMC to Receive Subsidies From Japan to Build Second Chip Plant

The combined monthly capacity of the two factories is projected to exceed 100,000 12-inch wafers, contributing to the supply chain for leading technology firms and automakers, including Sony and Toyota Motor.
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Introduction:

In a strategic move to strengthen its semiconductor manufacturing capabilities, Japan has announced additional subsidies of up to 732 billion yen ($4.86 billion) for TSMC. This comes after the opening of TSMC’s first Japanese factory in Kumamoto on February 24th, 2024.

The investment aims to facilitate the construction of a second chip fabrication plant in Japan. This is followed by the recent opening of TSMC’s first Japanese factory in Kumamoto on Kyushu island.

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Background of TSMC Japan Subsidies:

TSMC’s decision to establish chip manufacturing facilities in Japan aligns with Tokyo’s broader initiative to revive advanced semiconductor production and fortify industrial supply chains against potential disruptions. This is particularly relevant amid escalating tensions with neighboring China. The Japanese government sees this collaboration as a crucial step in ensuring a stable supply of cutting-edge semiconductors for various industries. This includes artificial intelligence (AI) and autonomous driving.

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First Factory Opening and Future Plans:

Inaugural ceremony for TSMC’s first factory in Kumamoto marked a significant milestone in the collaboration between TSMC and Japanese government. The facility aims to produce state-of-the-art chips, prioritizing advancements in technology for AI and autonomous vehicles.

According to Minister of Economy, Trade and Industry Ken Saito, the second chip fabrication plant will surpass the capabilities of the first one. The chips produced at the new facility will be tailored for advanced applications. This further solidifies Japan’s position in the global semiconductor landscape.

Financial Commitment and Subsidies:

Additional 732 billion yen in subsidies comes as an extension of the financial support provided to TSMC for its initial venture in Japan. The total taxpayer-funded subsidies for TSMC could now exceed 1 trillion yen. This emphasizes the Japanese government’s commitment to developing a robust semiconductor industry within its borders.

Total Investment and Capacity:

TSMC’s expansion plans in Japan involve a total investment exceeding $20 billion, encompassing both the existing and upcoming manufacturing facilities. The company aims to commence mass production in Japan by the end of the year. The two factories are projected to exceed a combined monthly capacity of 100,000 12-inch wafers. This contributes to the supply chain for leading technology firms and automakers, including Sony and Toyota Motor.

Global Expansion and Partnerships:

In addition to its endeavors in Japan, TSMC is actively expanding its operations globally. The company has strategic plans for growth in the United States and Germany, contributing to the decentralization of semiconductor manufacturing. This diversification aims to mitigate risks associated with geopolitical tensions and potential disruptions in the global supply chain.

Japan’s Independent Chip Venture:

In parallel with its collaboration with TSMC, Japan is making strides in developing a homegrown chip venture named Rapidus. In 2027, Rapidus, in collaboration with IBM and Imec, a European chip research organization, will commence mass production of state-of-the-art chips on the northern island of Hokkaido. This dual approach of collaboration with international giants like TSMC and the promotion of domestic ventures underscores Japan’s commitment to achieving semiconductor self-sufficiency.

Conclusion:

Japan’s substantial financial commitment to TSMC’s expansion in the country signifies a strategic move to secure its semiconductor supply chain and foster technological advancements. The collaboration not only addresses immediate concerns related to semiconductor shortages but also positions Japan as a key player in the global semiconductor industry.

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