TSMC to build second Japanese chip plant with over $20 billion investment

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    6th February 2024 – (Taipei) Taiwan Semiconductor Manufacturing Co (TSMC) announced on Tuesday its plans to construct a second chip plant in Japan, further expanding its presence in the country. The new plant is expected to commence operations by the end of 2027 and will represent a total investment of over $20 billion, with the support of the Tokyo government.

    In 2021, TSMC had initially revealed its intentions to build a $7 billion chip facility in Kumamoto, located in the southern region of Kyushu, Japan. Last month, the company confirmed that the first factory would open in February, with volume production scheduled for the fourth quarter. TSMC also expressed its interest in exploring the construction of a second plant in Japan.

    TSMC’s majority-owned subsidiary, Japan Advanced Semiconductor Manufacturing, based in Kumamoto, will be responsible for establishing the second fabrication plant. The decision to build the new facility is a response to the increasing customer demand for chips. Construction of the second fab is set to commence by the end of this year.

    Both factories combined will have a total monthly capacity of more than 100,000 12-inch wafers, catering to various sectors such as automotive, industrial, consumer electronics, and high-performance computing applications. However, TSMC noted that the capacity plan could be adjusted based on customer demand.

    TSMC, the world’s largest contract chipmaker and a key supplier to companies like Apple and Nvidia, owns an 86.5% stake in the Japanese venture. Sony Group holds a 6% stake, while auto parts maker Denso holds 5.5%, and carmaker Toyota holds 2%.

    The expansion of TSMC in Kyushu aligns with the Japanese government’s objective of revitalizing its position as a prominent chip manufacturing hub while ensuring a stable supply of chips amidst trade tensions between the United States and China.

    TSMC’s decision to build a second fab reflects its confidence in Japan, where the construction of the first fab proceeded smoothly. The company views Japan as a source of diligent workers and appreciates dealing with a government that facilitates business operations.

    Japan’s chip-making sector, once the world’s largest in the 1980s, has faced challenges in maintaining its competitiveness over the past three decades. Taiwanese manufacturers, on the other hand, have made significant progress. TSMC’s investment in Japan contributes to the country’s efforts to regain its chip manufacturing prominence.

    While TSMC and the Taiwanese government have stated that the majority of the company’s advanced manufacturing will continue to take place in Taiwan, TSMC has been expanding its global manufacturing footprint to meet customer demands.

    Apart from its Japanese expansion, TSMC is undertaking a $40 billion project to construct two fabs in Arizona, supporting the US government’s initiative to enhance domestic chip manufacturing capabilities. Additionally, the company is planning its first European factory in Germany, primarily catering to the automotive industry.

    TSMC’s stock on the Taipei-listed exchange has experienced an 8.9% increase so far this year, driven by the surge in demand for chips used in artificial intelligence applications. This outperforms the broader index, which has seen a 0.9% gain.