Japan pledges $5bn for second chip plant

Japan said it would give Taiwan Semiconductor Manufacturing Company (TSMC) up to ¥732bn ($4.86bn) more in subsidies to help it build a second chip fabrication plant as the Taiwanese company on Saturday marked the opening of its first Japanese factory.

TSMC’s decision to build chips in Japan has become a key component of Tokyo’s push to revive advanced semiconductor manufacturing and harden its industrial supply chains against disruptions as tensions with neighbouring China grow.

“The chips will be more advanced than the first factory and can be used for AI and autonomous driving, and will ensure we have stable supply of semiconductors in Japan,” economy, trade & industry minister Ken Saito said after attending a ceremony for the opening of the first factory in Kumamoto on Kyushu island, hosted by TSMC founder Morris Chang.

The latest financial commitment, which will add to money given to the world’s biggest chipmaker for its first factory, could push taxpayer-funded subsidies for TSMC beyond ¥1trillion.

TSMC, which is also expanding in the US and Germany, plans to ramp up to mass production in Japan before the end of the year. Total investment in the venture, including a second plant, will exceed more than $20bn, according to the Taiwanese company.

When completed, monthly capacity across the two factories will exceed 100,000 12-inch wafers that TSMC will supply to technology firms and carmakers, including Sony and Toyota Motor.

Japan is also investing in a home-grown chip venture, Rapidus, which is partnering with IBM and Imec, a European chip research organisation, in a bid to mass produce cutting edge chips on the northern island of Hokkaido from 2027.