Japan to Provide $4.9 Billion in Subsidies to TSMC for Second Chip Plant

Japan’s commitment to bolstering semiconductor manufacturing receives a significant boost as the country pledges substantial subsidies to semiconductor giant TSMC. With up to 732 billion yen ($4.86 billion) earmarked for TSMC’s second chip fabrication plant, Japan aims to fortify its semiconductor ecosystem and mitigate vulnerabilities in the face of escalating geopolitical tensions. The decision comes hot on the heels of TSMC’s inauguration of its inaugural Japanese factory, underscoring the pivotal role Japan plays in TSMC’s expansion strategy.

TSMC’s foray into chip production in Japan aligns with Tokyo’s broader agenda to reinvigorate domestic semiconductor manufacturing capabilities. As Japan seeks to nurture technological self-reliance and safeguard critical supply chains, TSMC’s advanced chip fabrication capabilities offer a promising avenue for fostering innovation and resilience in Japan’s tech sector. Minister of Economy, Trade and Industry Ken Saito emphasized the significance of TSMC’s expansion, highlighting the forthcoming second plant’s capacity to produce cutting-edge chips tailored for applications such as AI and autonomous driving, thereby ensuring a stable semiconductor supply chain for Japan.

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 1 trillion yen.The inauguration ceremony of TSMC’s first factory in Kumamoto, situated on Japan’s Kyushu island, provided a platform for government officials and industry leaders to underscore the strategic importance of semiconductor manufacturing in Japan.

As TSMC founder Morris Chang presided over the event, sentiments of collaboration and partnership permeated the atmosphere, underscoring the symbiotic relationship between TSMC’s technological prowess and Japan’s aspirations for semiconductor self-sufficiency. With plans to expedite mass production at its Japanese facilities by year’s end, TSMC’s expansion heralds a new era of collaboration and innovation, reinforcing Japan’s position as a global semiconductor powerhouse.

TSMC, which is also expanding in the U.S. 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 $20 billion, 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 homegrown chip venture, Rapidus, which is partnering with IBM <IBM.N> and Imec, a European chip research organisation, in a bid to mass produce cutting-edge chips on the northern island of Hokkaido from 2027.