Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other related companies would add ￥11.2 trillion (US$78.31 billion) to Japan’s chipmaking hot spot Kumamoto Prefecture over the next decade, a local bank’s analysis said.
Kyushu Financial Group, a lender based in Kumamoto’s capital, almost doubled its projection for the economic impact that the chip sector would bring to the region compared to its estimate a year earlier, a presentation on Thursday said.
The bank said that 171 firms had made new investments since November 2021, up from 90 in an earlier analysis.
Photo: EPA-EFE
TSMC’s Kumamoto location was once a sleepy farming area, but has undergone rapid growth as part of Japan’s chipmaking ambitions. TSMC, which opened its first plant there in February, is to start building a second by the end of the year and has shown intentions to construct a third.
The local economy is racing to keep up, with skyrocketing land prices and new infrastructure planned to deal with congestion from an influx of industry personnel. Kumamoto’s growth spurt has been supported by generous government subsidies, including grants totaling about ￥1.1 trillion for TSMC’s two plants to date.
Cooperation between Taiwan and Japan is increasingly crucial as supply chains become shorter and more regionally focused, a compound semiconductor company chairman said yesterday at a Taiwan-Japan exchange forum.
The global division of labor has been disrupted by the US-China trade and technology war, WIN Semiconductors Corp (穩懋) chairman Dennis Chen (陳進財) said.
“We have come to a point where there is no turning back, no matter who wins the presidency [in the next US presidential election],” he said during Semicon Taiwan.
However, localizing semiconductor manufacturing — widely regarded as a strategic resource — is easier said than done, as “every country has its specialty following 40 years of [globalized] supply chain development,” Chen said.
Taiwan and Japan are highly complementary in terms of their supply chain division of labor, he said.
“Taiwan is top in foundry and advanced packaging, and Japan leads in materials and equipment,” Chen said, citing Japan’s official numbers showing that it has 48 percent of the semiconductor material global market share and 31 percent of the equipment market share.
The two countries are also geographically and culturally close to each other, especially in terms of attitude toward work, he added.
On top of complementary dominant supply chain positions, Taiwan and Japan are on the side of democracy as “geopolitical changes have divided the world into two camps.”
In this democracy camp, more cooperation with the US, Europe, South Korea and Southeast Asia in forming a new supply chain is expected, he added.
Chen also said that customers in the US have urged his company to implement the “Taiwan plus one” strategy — manufacturing bases outside Taiwan.
In response, Chen said: “I believe Taiwan and Japan can take our cooperation to another level as we are natural partners in the industry.”
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