TSMC To Set Up 28nm Chip Factory In Japan, Likely To Be Operational By 2023: Report

Taiwnese chip making behemoth Taiwan Semiconductor Manufacturing (TSMC). is finalizing a plan to build a fab factory in Japan that could be operational operation as early as 2023, Nikkei Asia reported.

The world’s largest contract chipmaker announced that it is currently reviewing a plan to set up a specialty technology wafer fabrication plant, or fab, in Japan.

The chip manufacturing plant is likely to be located at Kumamoto prefecture , on the island of Kyushu in western Japan. Once the chip manufacturing facility is operational, it will be able to produce around 40,000 wafers per month using 28-nanometer technology The plant is expected to be mainly used to make image sensors for Sony, TSMC's largest Japanese customer.

“We are expanding our global manufacturing footprint to sustain and enhance our competitive advantages and to better serve our customers in the new geopolitical environment,” TSMC chairman Mark Liu informed an analyst call.

“While our overseas fabs are not initially able to match the costs of our manufacturing operations in Taiwan, we will work with governments to minimize the cost gap,” Liu said.

Taiwanese chipmaker is currently developing a $12bn+ site in Arizona, expanding its Chinese site, and considering opening a plant in the EU.

Much of the world is currently dependent on Taiwan and its dominant chip manufacturing giant, TSMC, to supply chips. But the island nation faces supply chain shocks and growing geopolitical concerns about China's expansionist designs — concerns that have accelerated U.S. plans to get TSMC and competitors to set up shop on U.S. soil too.

If TSMC goes ahead with the plan to construct a fab factory in Japan, it will be a significant boost to the country's bid to regain competitiveness in the chip manufacturing sector.

Also Read: Chip Wars: Erstwhile Chipmaking Champion Japan Plots A Plan To Regain Lost Glory In Semiconductor World But A Lot Still Depends On TSMC

Japan plans to invest invest at least ¥1 trillion ($9 billion) toward chip development this fiscal year and trillions more after that, if it is to have any hope of reviving its national industry, according to Tetsuro Higash, the government’s lead adviser on semiconductor strategy.

Japan is pursuing an all-out strategy to lure overseas semiconductor companies, including designing generous financial incentives.

"Japan will swiftly match efforts by other countries to attract cutting-edge chipmaking facilities so it can build a secure supply chain at home," a recent note presented to a Cabinet Office stated.

Japan lags behind South Korea and Taiwan in advanced chip manufacturing. It imports more than 60% of its semiconductors, much of them from Taiwan and China.

The 10-nanometer (nm) chips that drive smartphone is dominated by chip manufacturers from Taiwan and South Korea, 28nm technology used in automobiles is mostly produced in Taiwan and China.

Local Japanese player Renesas Electronics can mass-produce only up to 40nm chips domestically.

Japan’s share of global semiconductor sales plummeted to just 10% in 2019, down from 50% in 1988. The country still has 84 chip factories, the most in the world, but they’re not producing enough high-end products. As a result, Japan now has to import 64% of its semiconductors.

NEC, Toshiba and Hitachi were widely regarded as the pioneers in semiconductor industry during 1980s and 1990s. But this began to change in the 2000s as chip design became uncoupled from manufacturing, leading to the rise of foundries like Taiwan Semiconductor Manufacturing Company (TSMC)

In a bid to boost Japan's competitiveness in the chip manufacturing sector, the country recently signed off on a US$338 million semiconductor research project to develop cutting-edge chip technology in the country with. Around 20 Japanese companies will work with TSMC on this project. Japanese government will be funding half the project cost.