TSMC To Build Second Factory In Japan

Contract chip manufacturing giant, Taiwan Semiconductor Manufacturing Co (TSMC), has confirmed it will build a second fab in Japan, with the backing of well known Japanese businesses.

TSMC announced that the second factory in Japan comes “in response to rising customer demand”, and that when both fabs are operational, they will manufacture “100,000 12-inch wafers per month.”

Demand for chips continues to rise. Last year Japan had said it would sharply increase its spending on semiconductor equipment, as it seeks to bolster its position in the global market. The chip equipment industry association SEMI, had said that Japan is expected to spend $7 billion (£6bn) on wafer fabrication plant equipment in 2024.

Japanese fab

At the moment, most of TSMC’s manufacturing remains in Taiwan, but the firm is currently building plants in Germany and the US state of Arizona, as well as Japan.

In October 2021, TSMC had confirmed multiple reports that had suggested that it was considering building a chip factory in Japan, in conjunction with Sony Corp, alongside an investment from the Japanese government.

Three years ago TSMC said construction of its first Japanese plant would begin in 2022, with actual manufacturing of the first fab to begin in 2024.

That fab was to be jointly run with Sony, and was located in Kumamoto Prefecture, on land apparently owned by Sony and in an area adjacent to the Sony’s image sensor factory.

That first TSMC fab would focus on larger 22nm and 28nm chips used for image sensors and microcontrollers.

It cost $7 billion, which was split between TSMC, Sony, and the Japanese government.

Second fab

Now TSMC has confirmed “further investment into Japan Advanced Semiconductor Manufacturing, Inc – TSMC’s majority-owned manufacturing subsidiary in Kumamoto Prefecture, Japan.”

The second fab will aided by funding from Sony Semiconductor Solutions Corp; DENSO Corp; and Toyota Motor Corp. The second fab “is scheduled to begin operation by the end of the 2027 calendar year.”

TSMC will hold an equity stake of 86.5 percent, Sony 6 percent, DENSO 5.5 percent, and Toyota will be the minority shareholder at 2 percent.

“Together with JASM’s first fab, which is scheduled to begin operation in 2024, the overall investment in JASM will exceed US$20 billion with strong support from the Japanese government,” said the Taiwanese chip giant.

“In response to rising customer demand, JASM plans to commence construction of its second fab by the end of 2024,” it said. “The increased production scale is also expected to improve overall cost structure and supply chain efficiency for JASM.”

TSMC said that with both fabs, JASM’s Kumamoto site is expected to offer a total production capacity of more than 100,000 12-inch wafers per month starting from 40, 22/28, 12/16 and 6/7 nanometre process technologies for automotive, industrial, consumer and HPC-related applications.

It said that the capacity plan may be further adjusted based upon customer demand.

With both fabs, the Kumamoto site is expected to directly create more than 3,400 high-tech professional jobs.

Arizona delays

The increased production in Japan comes at a time when the chip maker is facing delays at its project in the US state of Arizona.

In 2020 TSMC had announced that it would be building a $12bn chip-making plant in Arizona, with construction of the fab starting in 2021.

In December 2022 TSMC revealed that in addition to its first fab in Arizona, it had also started the construction of a second fab – scheduled to begin production of 4 or 3nm process technology in 2026.

When complete, TSMC Arizona’s two fabs will manufacture over 600,000 wafers per year, with estimated end-product value of more than $40 billion.

But in July 2023 TSMC warned it will delay the start of chip production at the Arizona fab until 2025, due to a shortage of skilled labour.

And then last month TSMC said that its second factory in Arizona will also be delayed. That second facility will now be operational in 2027 or 2028, compared to previous expectations of a 2026 start.

TSMC is based in the Taiwanese city of Hsinchu, and produces roughly 90 percent of the world’s advanced semiconductors, with customers including the likes of Apple and Nvidia.

Previously, it typically kept its most advanced manufacturing at home in Taiwan, but it has been expanding abroad in recent years due to commercial pressure and encouragement from a number of national governments.