Semiconductor manufacturing giant TSMC pushes development of second chip plant in Japan with new investor Toyota

The world’s largest contract chip maker said Toyota will join as a new investor of its Japanese manufacturing subsidiary JASM
TSMC’s new facility will be built close to its first plant in Kumamoto Prefecture on the southwestern island of Kyushu

Taiwan Semiconductor Manufacturing Company (TSMC)

Bloomberg

Published: 9:53pm, 6 Feb 2024

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Taiwan Semiconductor Manufacturing Co (TSMC) is expanding its output in Japan with plans to build a second chip fabrication plant that marks a major victory for Prime Minister Fumio Kishida, as his government seeks to boost domestic production of integrated circuits.

TSMC, the world’s largest contract chip maker, said that Toyota Motor Corp will be joining as a new investor of Japan Advanced Semiconductor Manufacturing (JASM), the Taiwanese firm’s majority-owned manufacturing subsidiary in Kumamoto Prefecture on the southwestern island of Kyushu.

The TSMC board on Tuesday approved an injection of no more than US$5.26 billion in JASM, though it was not immediately clear how those funds would be used.

The new facility will be close to the first TSMC plant in Kumamoto. TSMC said in a statement on Tuesday that it would be adding 6- and 7-nanometre process technologies, advancing semiconductor production in that campus.

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TSMC’s second fab in Japan is scheduled to start construction at the end of this year and begin operation by the end of 2027.

Together with JASM’s first fab, the overall investment will exceed US$20 billion with “strong support from the Japanese government”, the Hsinchu, Taiwan-based company said.

TSMC is already considering a third Japanese factory using the even more advanced 3-nm tech, Bloomberg has reported.

The chip maker said the two factories in the Kumamoto site will have a total monthly production capacity of more than 100,000 12-inch wafers and create over 3,400 hi-tech jobs.

Major countries around the world – including the United States, Japan and Germany – have been racing to build a comprehensive semiconductor supply chain at home, following a chip shortage during the pandemic to avoid future disruptions to the economy.

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Japan’s Ministry of Economy, Trade and Industry is preparing some ¥2 trillion (US$13 billion) in subsidies to drive chip investments in a bid to regain its status as a major semiconductor power, with TSMC already having received some grants.

The Taiwanese chip maker’s first plant in Kumamoto is partly funded by Sony Group Corp’s Semiconductor Solutions Corp and Denso Corp. It uses technology as advanced as 12-nm, with mass production set to start late this year.

With the latest investment, TSMC, Sony, Denso and Toyota will each hold about 86.5 per cent, 6 per cent, 5.5 per cent and 2 per cent, respectively, in JASM.

TSMC is also building two advanced facilities in Arizona, but the US project has been delayed on labour and cost challenges.

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Meanwhile, TSMC and Taiwanese government officials have repeatedly said the Japan site is progressing smoothly.

TSMC’s board on Tuesday also approved a capital injection of no more than US$5 billion in its wholly-owned subsidiary in Arizona.

The Taiwanese firm has also announced plans for a plant in Germany.