Japan Boosts TSMC with $4.86 Billion for Chip Factory

Japan announced a subsidy of up to 732 billion yen to TSMC for building a second chip production unit, amidst tensions with China.

On February 24th, Japan has announced that it will provide further subsidies of up to 732 billion yen ($4.86 billion) to TSMC so that the Taiwanese firm can construct a second chip production unit. On Saturday, TSMC celebrated the launch of its first factory in Japan.

As tensions rise with neighboring China, TSMC’s plan to manufacture chips in Japan has become an important part of Tokyo’s efforts to resurrect sophisticated semiconductor production and strengthen its industrial supply chains to withstand disruptions.

During a ceremony hosted by Morris Chang, founder of TSMC, in Kumamoto on the island of Kyushu, Japan’s Minister of Economy, Trade and Industry Ken Saito assured reporters that the chips produced at the second factory would be more advanced than those at the first and would be suitable for artificial intelligence (AI), autonomous driving, and the maintenance of a steady supply of semiconductors.

Taxpayer subsidies for TSMC might go beyond 1 trillion yen with the most recent financial commitment, which will increase the amount allocated to the largest chipmaker in the world for its first factory.

TSMC, which is planning to ramp up to mass manufacturing in Japan before the year ends, is also expanding in the US and Germany. The Taiwanese firm claims that the total investment in the partnership, including the second plant, will surpass $20 billion.

After the two factories are fully operational, TSMC will be able to meet the monthly demand for 12-inch wafers from companies like Sony and Toyota Motor, among others.

In an effort to mass produce innovative chips in the northern island of Hokkaido starting in 2027, Japan is also putting money into a domestic chip startup called Rapidus. This venture is collaborating with IBM and Imec, a European chip research organization.
$1.5 million yen