TSMC plans for new semiconductor plant seen as major win for Japan

The country is hoping to build a manufacturing base to immunise it from global shortages

Taiwan Semiconductor Manufacturing Company (TSMC) is thinking of opening its first chip plant in Japan as the country pushes to attract more foreign investment into its manufacturing sector.

TSMC is considering plans to open a plant in the Kumamoto Prefecture in western Japan, four sources have told Nikkei Asia.

The facility would sit near an existing plant owned by Sony, one of TSMC's key suppliers, and would help meet growing demand for image sensors, automotive microcontrollers, and other chips.

"TSMC is considering a proposal by the Japanese government to build an advanced chip factory in Japan, though it has not yet fully committed and finalised [the plan]," one of the sources told the publication.

TSMC is looking to build a 12-inch wafer plant able to switch between different process technologies, including 28-nanometer and 16-nanometer production tech. As many of the tools are shared, the company does not want to stick to only one process technology, a source said.

A new semiconductor plant would be seen as an enormous win for Japan, which is aiming to attract overseas companies through financial incentives in a bid to secure its own chip supplies and address the global shortage.

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Japan, which imports over 60% of its semiconductors from overseas, wants to build a supply chain of this technology at home, with one official saying that semiconductors are "now as important as food or energy".

TSMC is already part of a $338 million (£238 million) research project launched by the Japanese government, which will see it collaborate in the development of new chip technology. Over 20 Japanese companies are also set to take part in the project, with half of its funding coming from the Japanese government. The research is going to focus on tech for 3D chip assembly, with the intention of boosting Japan's competitiveness in this key sector.

Japan isn't the only country trying to attract the Taiwanese chipmaker, as the US reportedly requested it expand its presence in the country, resulting in TSMC announcing it would build an extra five chip plants in Arizona on top of the $12 billion chip factory it had announced the previous year.

As TSMC manufactures most of its chips in Taiwan, with some factories in Washington and China, the Arizona project represents a major expansion of its plans to shift some manufacturing to the US.

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