Japan considers funding for Taiwan’s TSMC to build chip factory

The Japanese government is considering financial support for Taiwan Semiconductor Manufacturing Co. to build a chip manufacturing plant, potentially with Sony Group Corp., in Kumamoto Prefecture in southwestern Japan, sources in the know said on Friday. folder.

Aid to the world’s largest contract chipmaker, which could amount to billions of US dollars, could be included in a supplementary budget that Prime Minister Fumio Kishida aims to compile by the end of December, stressing its increased emphasis on the economic dimensions of national security. .

The file photo shows a factory of Taiwan Semiconductor Manufacturing Co. in Hsinchu, Taiwan. (Photo courtesy of Taiwan Semiconductor Manufacturing Co.) (Kyodo)

Strengthening supply chains for critical components such as semiconductors has become an urgent issue. Japan has agreed with the United States to step up cooperation in the region as Washington and Beijing vie for a technological advantage.

TSMC chairman Mark Liu told a shareholders meeting in July that the goal was to build a factory in Japan. The Sony group already has facilities in Kumamoto to manufacture image sensors used in smartphones.

As a joint factory is expected to benefit both, there has been speculation that Taiwanese supplier Apple Inc. and the Japanese conglomerate could work together.

Japan, for its part, has called for building a semiconductor manufacturing base in the country amid a global chip crisis, and Kumamoto is now the most likely construction site, people said. government sources.

If construction continues, it will likely cost between 700 billion yen ($ 6.3 billion) and 800 billion yen, with the possibility that the government will cover about half of the amount by providing financial support, the sources said. .

Kishida, a former foreign minister who was elected prime minister on Monday, prioritized economic security and appointed a minister in charge of the issue.

Yet it is rare for the government to help businesses, especially overseas ones, pay substantial construction costs, and gaining public support for spending several hundred billion yen could prove to be a hindrance.

However, if a TSMC factory is built, it may be an incentive for materials and chip related companies to stay in Japan.

Japan’s dependence on Taiwan as a supplier of advanced semiconductors is high, and securing the future supply of critical components is becoming increasingly critical.

Japanese chipmakers had a competitive advantage, but have lost to their Chinese and South Korean rivals over the years.

“We must promote the construction of advanced semiconductor manufacturing bases in Japan,” Economic Security Minister Takayuki Kobayashi told reporters on Tuesday.

Japan is not alone in seeking to establish strong semiconductor supply chains, with huge sums of money earmarked by the United States, China and the European Union to invest in the field. key closely related to national security.

The administration of US President Joe Biden, for example, has asked for around $ 50 billion to develop the semiconductor industry while China has some $ 90 billion in dedicated funds.

Semiconductors are used in a variety of products, from laptops and game consoles to cars. The coronavirus pandemic has led to an increase in demand for chips.

In February, TSMC decided to establish a research and development subsidiary in Tsukuba, Ibaraki Prefecture near Tokyo. In addition, the chip giant unveiled a $ 100 billion investment plan over the next three years to increase production capacity.

The Liberal Democratic Party, now led by Kishida, made proposals to the government in May calling for support “comparable to other nations” for domestic semiconductor development and manufacturing.

Japan’s ruling party is preparing to emphasize stronger economic security as one of the main pillars of its platform ahead of the October 31 lower house elections.

Associated coverage:

Taiwan’s TSMC considers Kumamoto as site for first chip factory in Japan

Japan will provide 19 bil. yen to the advanced chip project led by a Taiwanese company

Japan asks Taiwan to increase semiconductor production amid supply crunch

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