Japan Govt. to chip in for TSMC’s multi-billion dollar new foundry

TSMC CEO, C. C. Wei, has confirmed the company will build a new semiconductor manufacturing foundry in Japan.

Construction will begin next year at an estimated cost of around US$7 billion, with TSMC planning to be commercially producing semiconductors at the facility by late 2024.

C. C. Wei made the announcement on an investor call following the release of TSMC’s bumper third quarter results, in which the company recorded profit of US$5.56 billion in the three months to September 30.

Here’s what he said during the conference attended by Asia Markets.

“We are expanding our manufacturing footprint to extend and enhance our competitive advantage in providing industry leading technologies, the world’s largest capacity, efficient and cost effective manufacturing and to better serve our customers,”

“Our global manufacturing expansion strategy is based on customers’s needs, business opportunities, operating efficiencies and cost economies considerations.

“After conducting due diligence, we announce our decision to build a specialty technology fab in Japan, subject to our board of directors approval.

“We have received a strong commitment to support this project from both ou customers and the Japanese Government.

“We believe the expansion of out global manufacturing footprint will enable us to better serve our customers’ needs and enrich global talent, while earning the proper returns form our investments and deliver long term profitable growth for our shareholders.”

– C.C Wei, TSMC results call, 14/10/2021

The new facility will produce 22-nanometer and 28-nanometer technology for semiconductor wafer fabrication.

TSMC says its 22-nanometer technology is used in applications including image processing, digital TVs, set-top boxes, smartphones and consumer products.

It’s 28-nanometer technology is used in Central Processing Units (CPUs), graphic processors (GPUs), high-speed networking chips, smart phones, application processors, tablets, home entertainment, consumer electronics, automotive, and the Internet of Things.

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Japan Government support

According to Japan Post sources, TSMC is set to receive as much as several billion U.S dollar from the Japanese Government to support the project.

The funds are expected to be included in a budget to be unveiled by new Prime Minister Fumio Kishida in December.

Shortly after the announcement by TSMC, Kishida said he welcomed TSMC’s decision to build a foundry in Japan which would “contribute to Japan’s chip self-sufficiency”

Chip-thirsty Japanese multinationals inducing Toyota Motor Corporation, Sony Group and automotive components manufacturer DENSO Corporation have all been linked to the new foundry and are believed to be in talks with TSMC to set up operations on the site as key clients.

Chip shortages have plagued many major tech firms across the world throughout 2021. Sony experienced major delays with the production of new-model PlayStations, while almost every major auto-manufacturer globally has reported disruptions.

Such was the critical nature of the shortage, following the U.S election, President Biden said establishing U.S. domestic leading-edge semiconductor manufacturing capabilites would be one of his key priorities.

“These chips, these wafers, are batteries, broadband… it’s all infrastructure. This is infrastructure. So, look, we need to build the infrastructure of today, not repair the one of yesterday,” said the President.

However, right now it appears the world’s dependence on the Asia region for leading-edge semiconductor manufacturing will prevail for many years to come.

TSMC and Samsung are currently the only two companies in the world operating foundries for the fabrication of leading-edge semiconductors.

Asia Markets Partner