Why TSMC Is Looking To Japan For Its Next Semiconductor Plant

Taiwan Semiconductor Manufacturing Co.’s planned plant opening in Japan will place the chip maker close to significant buyers and suppliers, including many of the world’s leading producers of electronics and cars and growing demand for silicon chips.

TSMC was founded by the billionaire Morris Chang, said last week, it will start construction of the plant in 2020 and begin production in the second quarter of 2024. “We have received a strong commitment to supporting this project from both our customers and the Japanese government,” C.C. Wei, the CEO of TSMC, announced at an earnings conference this week.
The Japanese government could have made an offer the chance to “open a bunch of doors” to TSMC, according to Mark Natkin, managing director of Beijing-based market research firm Marbridge Consulting. “I would suspect that either the Japanese government has promised to provide some incentives or better access,” Natkin adds.

Japan, like China and the U.S., and Europe, wants chipmakers to be prepared if a pandemic or geopolitical issues disrupt supply chains, according to Joanne Chiao, an analyst of Taiwan-based research company TrendForce. Due to its global footprint, TSMC “has naturally become the target of active invitations by governments to set up factories,” Chiao states. TSMC hasn’t shied away from the possibility of building manufacturing facilities in different countries if it’s economically feasible and feasible, she says.

This Japan plant follows a similar announcement made last year to construct the $12 billion chip plant in Arizona close to Silicon Valley clients as Apple and Nvidia compared to Taiwan. TSMC performs the majority of its manufacturing.

A manufacturing facility located in Japan could offer similar advantages. Japanese Electronics company Sony expects to manage the plant and make semiconductor chips for automobiles, in addition to other items, Japanese news agency Kyodo announced this week. A Japanese manufacturer of car parts Denso is looking into joining the venture, Kyodo added.

Sony makes smartphones, as well as other products as well. Japan is the home of Toshiba as well as automakers such as Honda. The suppliers are grouped within the same Asian technological powerhouse Chiao claims. Chiao. “Japan, once the world’s largest semiconductor cluster, still occupies a significant position in some semiconductor equipment, raw materials and packaging materials, and technologies,” she adds. Chiao believes that TSMC will “cooperate closely with upstream equipment vendors, chemical raw materials factories.”

On March 1, TSMC committed to spending $100 billion in three years to develop new technologies and facilities as the demand for chips increased across the globe. TSMC has not disclosed the costs of its brand-new Japan facility. However, it stated that it would be added on top of that $100 billion commitment.

The growth in demand to purchase 5G-compatible smartphones and computers, cars, data servers, and automotive technology has increased demand for a chip. Intel announced a $20 billion investment in March to construct two manufacturing facilities in Arizona. Samsung plans to build a $17 billion facility located in the U.S.

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Adam Collins
Adam writes about technology, business and economics. With master's degree in Economics, he's presented six papers in international conferences. As a solivagant in the constant state of fernweh, curiosity is the main weapon in his arsenal.

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