TSMC Considers Construction Of Japanese Factory – Report

World’s largest contract chipmaker is considering construction of a new factory in Japan to help tackle global chip shortage

Taiwan Semiconductor Manufacturing Company (TSMC) has confirmed it is considering the construction of a new fabrication plant in Japan.

The move is highly significant, as TSMC is the world’s largest contract chipmaker and is leading the fight to end the ongoing chip shortage that has plagued the automotive, IT and other sectors for the past year.

It should be remembered that in April TSMC had pledged to invest $100m funding to bolster advanced chip manufacturing over the next three years, in order to meet demand.

Japan © Maxx-Studio Maxx-Studio Shutterstock 2012

Arizona factory

TSMC has been plotting the construction of a US factory for a while now.

The firm announced in May 2020 that it intended to build a $12 billion factory in Arizona, which was its biggest foreign investment at the time.

In November 2020 TSMC announced that it would provide an investment of paid-in capital of $3.5 billion to set up a wholly-owned subsidiary in Arizona.

Then last month TSMC confirmed that construction of a chip factory had begun in the United State of Arizona.

The Taiwanese chipmaker hopes the Arizona factory will begin production in 2024 and will make sophisticated 5 nanometer chips, which can be used in high-end defense and communications devices.

The factory is expected to process up to 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips.

TSMC manufactures the bulk of its chips in Taiwan, and has older chip facilities in China and Washington state.

Japanese Factory

But now Bloomberg reported that TSMC CEO, C.C. Wei, announced during a question-and-answer session after it reported financial results for the second quarter, that the chipmaker is going through “due diligence” to build a fabrication plant in Japan.

The firm is also expanding its manufacturing capabilities in China to address the silicon shortage.

When Wei was asked specifically about Japan – where local politicians have talked up the importance of such an investment – he said TSMC wouldn’t rule anything out at this point.

“In Japan, we’re in the due diligence process to do a wafer fab,” Wei reportedly said.

Final decision

However, chairman Mark Liu then cautioned there is no final decision yet on a Japan fab.

The ultimate outcome will depend on customer demand, he reportedly said.

Liu characterised any Japan fab as “speciality technology,” a term that usually refers to mature node chips that serve specific or niche markets.

In an effort to address the chip shortage, Intel in February said it would spend $20 billion to build two new fabs in Arizona, in an effort to bolster production at its existing fab in the state.

Intel also said it would re-enter the contract chipmaking business, to make chips for outside customers.