Semiconductor and chip manufacturing giant Taiwan Semiconductor Manufacturing Co (TSMC) has begun mass production of logic chips at a newly opened factory in Kumamoto Prefecture, Japan, with the construction of a second plant to begin in March next year.
The company has been diversifying its supply chains in a bid to sidestep US-China tensions around Taiwain, with fears a 'chip war' could directly impact the global semiconductor industry.
“I do believe the escalation between US and China, especially like the chip war, will become higher and higher and that will dampen the growth for the global semiconductor [industry],” First Securities Investment Corporation chair Paul You said last month.
Japan invests heavily in semiconductors
TSMC has been offered 1 trillion yen (US$6.3 billion) in subsidies by the Japanese Government, which sees domestic chip manufacturing as a critical piece in its economic security as a tech powerhouse.
Japan was the largest semiconductor producer globally until Taiwain took the crown in the 1980s, and South Korea recently replaced Japan as the second largest manufacturer.
A second TSMC plant is due to begin construction in March next year, targeting the start of operations by the end of 2027.
Japanese Prime Minister Fumio Kishida said his government would “act in a speedy fashion” to support the industry.
Between the two factories, TSMC expects to produce 100,000 12-inch wafers for automotive, industrial, consumer and high-performance computing applications.
TSMC is a major supplier of chips to the world’s leading tech companies, including NVIDIA, Apple, Sony and Toyota.
"The Japanese Government's swift action to allocate subsidies in attracting key chip players makes it a top destination for Taiwanese chipmakers seeking to expand overseas production," Arisa Liu, veteran chip analyst and research fellow with the Taiwan Institute of Economic Research, told Nikkei Asia.
"Taiwan's and Japan's chip industries enjoy a strong synergy with minimal competition, with Taiwan mastering manufacturing and Japan having expertise in chipmaking machinery and materials.
“This complementary nature suggests we can likely expect more collaborations in the future."