Taiwan’s partnerships with Japan in the semiconductor sector is solidifying, as reflected in Taiwan Semiconductor Manufacturing Co’s (TSMC) latest attempt to gear up its global manufacturing footprint expansions. The world’s biggest contract chipmaker last week said that it was “seriously considering” building a second fab in Japan after the construction of its first fab in Kumamoto went smoothly and is scheduled to open on Feb. 24 before cranking out its first chips by the end of this year.
The chipmaker also revealed that it might utilize advanced 7-nanometer technology or less advanced 16-nanometer technology at the second fab, once the expansion plan is finalized. It is widely expected that TSMC would adopt 7-nanometer technology, an upgrade from the 12-nanometer, 16-nanometer, 22-nanometer and 28-nanometer technologies that are to be used to make chips at the first Kumamoto fab.
The chipmaker’s new capacity buildup in Japan is outpacing its expansion in Arizona, a result of the differences in work culture and subsidy grants. TSMC has pushed back the operation date of its second fab in Arizona to 2027, or even 2028, from its original schedule to open in 2026. The chipmaker is still evaluating which technology to deploy there. Previously, the company said it had planned to make 3-nanometer chips at the factory.
Customer demand and a “certain level of government subsidy or support” are two determining factors behind its decisions on where it would build its manufacturing sites and which technologies, or capacity it would deploy, TSMC said. The Japanese government showed stronger ambition to revive its semiconductor industry as the Cabinet in November last year approved a new ￥2 trillion (US$13.52 billion) semiconductor subsidy plan, with ￥900 billion of the amount allocated for TSMC’s second fab in Kumamoto. The subsidy accounts for more than one-third of the fab’s construction cost.
The latest development in TSMC’s new global manufacturing footprint expansions might coincide with founder Morris Chang’s (張忠謀) comment in October last year that Japan and Singapore might have the best chance to rise as winners in the global chip race, given their work culture and abundant supplies of water and electricity.
Although TSMC has said that more than 60 percent of its supplies would come from its Japanese partners, Taiwanese companies are looking at potential opportunities too, as the chipmaker is expected to build two or even three fabs in Japan.
TSMC’s local partners such as Materials Analysis Technology Inc (MA-tek) and Finesse Technology Co have started new capacity expansion plans such as labs or new production lines in Kumamoto. Finesse Technology provides semiconductor equipment and maintenance services to TSMC, while MA-tek provides material and failure analyses.
Local semiconductor companies are not the only ones flocking to Japan; local banks and airlines also see new opportunities in expanding. CTBC Commercial Bank Co’s Japanese subsidiary Tokyo Star Bank has launched an office in Kumamoto, targeting growing corporate loan and housing mortgage demand in the region with the arrival of TSMC, it said last month. CTBC is the second Taiwanese bank to open a branch on Japan’s Kyushu, following E.Sun Commercial Bank.
Overall, Taiwan’s trade partnership with Japan is likely to grow, first in the semiconductor sector and then spreading out into other sectors.
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