Japan Allocates $4.9 Billion in Subsidies for Construction of TSMC Chip Plant

A factory of Taiwanese semiconductors manufacturer TSMC at Central Taiwan Science Park in Taichung, Taiwan, on March 25, 2021. Sam Yeh/AFP via Getty Images

The Japanese government has pledged to provide 730 billion yen (around $4.85 billion) in extra subsidies for the construction of chipmaker Taiwan Semiconductor Manufacturing Co.’s (TSMC) second plant in Japan.

The subsidies were announced following the opening ceremony of TSMC’s first plant in Japan’s Kumamoto Prefecture on Feb. 24, which was attended by Japanese Minister of Economy, Trade and Industry Ken Saito.

During the ceremony, TSMC also unveiled its plan to build a second fab in Kumamoto Prefecture, which it said will commence construction by the end of 2024 and begin operation by the end of 2027.

“The chips will be more advanced than the first factory and can be used for AI and autonomous driving, and will ensure we have [a] stable supply of semiconductors in Japan,” Mr. Saito told reporters following the event.

Japanese Prime Minister Fumio Kishida, who attended the ceremony virtually, has also affirmed that his government would financially support TSMC in building its second plant in the country.

“Semiconductors are an essential technology for digitalization and decarbonization,” Mr. Kishida said in a video address, according to Kyodo News.

Japan is expected to provide funding totaling 1.2 trillion yen ($8 billion) for the project. The total investment for the first plant is around $8.6 billion, with around $3.2 billion to be subsidized by the government.

“We are thankful for the joint efforts of our partners in Japan, whose unfaltering support has contributed greatly to the success of this project,” TSMC Chairman Dr. Mark Liu said at the ceremony.

The two fabs are expected to offer a total production capacity of more than 100,000 12-inch wafers per month, which will produce nanometer process technologies—including 12-nanometer chips—for automotive and industrial, the company said.

TSMC, which is also expanding in the United States and Germany, said that total investment in the venture, including a second plant, will exceed more than $20 billion, with “strong support” from Japan’s government.

The two fabs are expected to create over 3,400 high-tech professional jobs in Japan, according to the company.

The newly-launched plant is operated by TSMC’s majority-owned subsidiary, Japan Advanced Semiconductor Manufacturing (JASM)— in which Sony Semiconductor Solutions, DENSO, and Toyota have also joined as minor investors.

“JASM will use the latest green manufacturing practices to produce best-in-class specialty semiconductor technology that will help to unleash innovation and bolster the Japanese economy for years to come,” Mr. Liu said.

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

Reuters reported that at least nine Taiwanese chip firms have set up shop or expanded operations in Japan over the past two years.

Reuters contributed to this report.