Chip giant TSMC opens first Japan factory as it diversifies away from Taiwan amid U.S.-China tensions

Taiwan Semiconductor Manufacturing Company opened its first chip plant in Japan on Saturday as it diversifies supply chains away from Taiwan amid intensifying U.S.-China trade tensions.

TSMC, which is the world’s largest contract chip manufacturer with clients such as Nvidia and Apple, has been courted by Europe, the U.S. and other countries to set up local operations.

Paul You, chairman of First Securities Investment Corporation said last month that the global semiconductor industry including Taiwan’s could be at risk from the U.S.-China chip war.

“I do believe the escalation between U.S. and China, especially like the chip war, will become higher and higher and that will dampen the growth for the global semiconductor [industry],” said You.

Located in Kumamoto, the chip fabrication plant in Japan will be equipped with a cleanroom — a controlled and sterile environment critical for chip making — with about 45,000 square meters of area, with production expected to start by the end of 2024, TSMC said.

Japan Advanced Semiconductor Manufacturing Inc., the manufacturing company majority-owned by TSMC, began construction of the plant in April 2022.

JASM was set up in Japan in 2021 with support from the Japanese government, Sony Semiconductor Solutions and Japanese automotive components maker Denso Corporation to fuel the growth of the country’s semiconductor ecosystem.

Japan has been striving to strengthen its semiconductor presence amid an intense rivalry with key chip making countries such as Taiwan and South Korea. Its chip-manufacturing industry is 10 years behind world leaders TSMC and Samsung, according to an August report from the Center For Strategic & International Studies.

Earlier this month, TSMC, Sony Semiconductor Solutions, automaker Toyota and Denso announced further investment into JASM to build a second chip fabrication plant, with construction set to start by year-end and operations to commence by end-2027.

With the two plants, which are expected to directly create more than 3,400 high-tech professional jobs, the Japanese government’s investment into JASM will total more than $20 billion.

TSMC’s two factories in Japan will focus on producing semiconductors for automotive, industrial, consumer uses and to meet high-performance computing-related needs.

The company is also building one of its largest overseas projects with a $40 billion investment in Arizona for two chip manufacturing plants aimed at meeting the U.S. annual demand.