Taiwanese chipmaker TSMC is planning to spend more than 1 trillion yen ($7.4 billion) to build a second chip factory in Japan, the Nikkan Kogyo newspaper reported on Friday.
The fab will produce 5 and 10 nanometre chips from the second half of the decade, the report said.
The decision by Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, could help Japan revive its advanced semiconductor manufacturing.
Japan, which once made over half the world’s chips, now only makes around a 10th of them. It is, however, is a major supplier of machines used to make leading-edge semiconductors.
When asked about the report, TSMC referred to comments from CEO CC Wei at its last quarterly earnings call in January that the company was considering building a second plant in Japan. The chipmaker said it had nothing further to add.
TSMC is already constructing a foundry on Kyushu island in Japan. It is set to begin production of 12 and 16 nanometre chips from next year.
Japan’s chipmaking ambitions
The Japanese government has offered TSMC a 476-billion yen ($3.43 billion) subsidy for its first factory. That is about half the expected cost of the plant.
Sony Group Corp and auto parts maker Denso Corp, which will use the chips made at the factory, are also investors.
Japan’s government is likely to invest billions of dollars more going forward in its effort to revive it chipmaking abilities.
In November, Japan announced it will make a $500 million initial investment in a new chip venture named Rapidus.
“Semiconductors are going to be a critical component for the development of new leading-edge technologies such as AI, digital industries and in healthcare,” Minister of Economy, Trade and Industry Yasutoshi Nishimura said at the time.
The two fabs by TSMC, the world’s leading maker of advanced logic chips, will also help relieve Japan’s supply chain concerns, amid the intensifying chip war between China and the US.
Japan wants to ensure its carmakers and tech companies do not run short of chips as Washington restricts Beijing’s access to sensitive semiconductor technology.
It also wants to secure its supply of advanced chip technology necessary to nurture new fields such as artificial intelligence (AI).
Japan, along with the Netherlands, has already agreed to join the United States in halting shipments of chipmaking equipment produced by the likes of Nikon Corp in a bid to stop China developing and advanced chips that could be used to enhance its military power.
- Reuters, with additional editing by Vishakha Saxena