Competitive pay at TSMC plant may ripple across Japan, beat inflation
- TSMC’s US$8.6 billion plant along with spending plans by its peers such as Rapidus and Micron could spur more investment and competition for talent
- Japan sees domestic chip production as critical for its economic security, as heavy dependence on major supplier Taiwan poses geopolitical risks
The world’s leading contract chip maker, Taiwan Semiconductor Manufacturing Co (TSMC), could infuse new momentum into pay hikes that outpace price increases in inflation-plagued Japan, an essential element Prime Minister Fumio Kishida has long pursued.
TSMC’s generous compensation packages to recruit for a new plant in Kikuyo, a town in Kumamoto Prefecture on the southern island of Kyushu, can serve as a wake-up call to manufacturers not just around the area, but in other regions of the country, economists say.
The spillover effect will be critical as the world’s third- largest economy is at risk of stagflation if wage hikes continue falling behind price rises.
“Tailwinds are blowing,” said Kazuma Kishikawa, an economist at Daiwa Institute of Research.
The Taiwanese company’s US$8.6 billion plant along with other vast spending plans by its peers such as Rapidus and Micron Technology could spur more investment and competition for talent and hence labour market liquidity and wage growth in broader sectors, he said.
The Kishida government is poised to help the semiconductor industry with financial aid to meet its goal of tripling domestic sales of chips, parts and materials to 15 trillion yen (US$105 billion) by 2030, while seeking to encourage companies to boost capital spending through tax credits.