Japan TSMC Expansion

Japan to invest $6 billion in TSMC 2nd fab to produce 6-12nm chips

Typically, such subsidies cover about one-third of the project cost. Therefore, the additional subsidy of 900 billion yen(~6B$) represents a substantial financial contribution, with the government anticipated to shoulder more than one-third of the total project cost.
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Introduction

Japan is poised to inject an additional 1.49 trillion yen (approximately $10 billion) into two significant semiconductor projects including TSMC.

This monumental commitment aims to fortify the country’s domestic semiconductor industry and solidify its status as a pivotal player in the global technology sector.

Japan’s allocation of such substantial funds comes at a critical juncture, with semiconductor shortages raising concerns about the nation’s supply chain resilience.

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Key Projects and Funding Allocation

Yoshihiro Seki, the secretary-general of Japan’s ruling party, the Liberal Democratic Party, recently disclosed the allocation of these substantial funds. The disbursement of this colossal investment includes two primary areas:

TSMC’s Second Factory in Kumamoto

The second TSMC factory in Kumamoto emerges as a linchpin of this ambitious investment. TSMC is globally renowned for its semiconductor manufacturing prowess. TSMC’s decision to invest in Japan heralds a substantial boost to the country’s semiconductor industry.

This factory, anticipated to cost approximately 2 trillion yen(~15 B $), is earmarked for the production of 6-12 nm chips. These chips will find applications in an array of products, including electric vehicles.

The significance of this investment goes beyond monetary support; it is a strategic commitment to foster Japan’s semiconductor capabilities and promote collaboration with TSMC. The substantial subsidy allocated to TSMC’s factory underscores the Japanese government’s dedication to ensuring the success of this project.

Typically, such subsidies cover about one-third of the project cost. Therefore, the additional subsidy of 900 billion yen(~6B$) represents a substantial financial contribution, with the government anticipated to shoulder more than one-third of the total project cost.

This follows the Japanese government’s previous commitment to provide 476 billion yen for the construction of TSMC’s first factory in Kumamoto.

Support for Semiconductor Start-Ups

In addition to bolstering established industry leaders like TSMC, Japan is allocating 500 billion yen to support new semiconductor start-ups, with a special focus on the Rapidus project.

Rapidus is actively engaged in the establishment of a cutting-edge 2nm process wafer plant in Hokkaido, with the allocation of these funds aiming to stimulate innovation and equip emerging players in the semiconductor field with a competitive advantage.

Read More: Japan Pumps $1.2B Subsidy into Micron Chip Plant in Hiroshima

The Significance of Government Subsidies

The Japanese government’s generous subsidies have multifaceted importance. These subsidies provide vital financial support to counter the high costs of semiconductor manufacturing. Additionally, they play a crucial role in fostering growth and development in the industry. Government support is crucial for several reasons:

Long-Term Growth: The semiconductor industry is highly capital-intensive. Government subsidies help to mitigate the financial risks and facilitate long-term growth in this sector.

Knowledge Transfer: These subsidies also facilitate knowledge transfer. For instance, in the case of TSMC’s factory, they enable training of Japanese engineers and encourage collaboration with Japanese companies. This knowledge transfer is instrumental in building domestic capabilities and expertise.

Strategic Competitiveness: By supporting both established industry giants and innovative start-ups, Japan is positioning itself strategically to remain competitive in the semiconductor market. This investment isn’t just about immediate supply chain concerns; it’s about securing the nation’s technological future.

Read More: 3 Reasons Why TSMC Plans to Build Another Fab in Japan After US Friction

Conclusion

Japan’s substantial commitment of $10 B in semiconductor subsidies is a transformative move to bolster its tech industry and solidify its global standing.

These funds will support the construction of a second TSMC factory and empower emerging semiconductor ventures.

This initiative is crucial, as it has the potential to revitalize Japan’s tech position and ensure its continued prominence in the semiconductor domain.

References:

Tech News Taiwan

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