Taiwan Chip Giant to Expand to Japan
November 02, 2021
Taiwan Semiconductor Manufacturing Company (TSMC), one of the world's largest
chipmakers, has announced plans to build a new plant in Japan, a move experts
say may help revive Japan's declining chipmaking sector and bolster its economic
The new plant is slated to begin operation in 2024, said CEO C.C. Wei, who
announced the expansion. The operation will expand TSMC's worldwide production
while fostering Taiwan's economic ties to Japan, according to Yukan Fuji, a
The move comes as Japanese manufacturers and others eye Beijing's intentions
toward Taiwan, where most TSMC plants are located. Any disruption in Taiwan
affecting TSMC production could strain the global supply chain to the snapping
"We have received strong commitment to supporting this project from our
customers and the Japanese government," said Wei.
The Japanese government intends to subsidize about half of TSMC's roughly $8.81
billion project, according to TechTaiwan.
Kazuto Suzuki, a University of Tokyo professor who focuses on public policy,
told VOA Mandarin that it is "very important" that "Sony and Toyota's parts
manufacturer Denso is also invested in the joint construction. … Furthermore,
TSMC's products are tailored to demand. With Sony's vast customer base, TSMC can
establish a model of close communication with customers and create products with
higher customer satisfaction."
TSMC's plans to build a new plant in Japan are part of its global expansion.
The chipmaker is already building a $12 billion facility in the U.S. state of
Arizona, where production is expected to begin in 2024. The plant is slated to
produce 5-nanometer chips, the latest in semiconductor technology.
Decreasing reliance on China
Expanding into Japan will bolster that country's chipmaking. "We expect our
country's semiconductor industry to become more indispensable and self-reliant,
making a major contribution to our economic security," Japanese Prime Minister
Fumio Kishida told reporters on October 14, after TSMC's announcement.
"The increasingly tense relationship between Taiwan and China has increased
geopolitical pressure on the supply chain, so the world is rebuilding the supply
chain to break away from dependence on China," Ruay-Shiung Chang, chancellor of
Taipei University of Commerce, told VOA Mandarin.
"From the perspective of risk management, Western countries and China will
inevitably be polarized in the future, and many industry standards may become
interchangeable," he added.
Suzuki believes that TSMC's plan will make the company an "economic and trade
friendship ambassador" to Japan as the economic link between Tokyo and Beijing
"Since the Trump administration, exports of semiconductors to China have been
restricted. For example, Japan no longer cooperates with Huawei," he said,
referring to the Chinese tech multinational targeted by the U.S. for its close
ties to Beijing. "So regardless of whether TSMC enters Japan or not, the
semiconductor industry ties between Japan and China are a big problem, and there
is currently no solution."
Impact on other chipmaking countries
Nikkei Asia reported that if TSMC accepted financing from the Japanese
government, South Korea and other countries could file complaints with the World
Trade Organization (WTO), citing the loss of semiconductor exports to subsidized
plants in Japan.
"How about South Korea's subsidies for its own domestic [chipmakers]?" Chang
said. The South Korean government said in May that it plans to offer tax
incentives and state subsidies worth a combined $453 billion to chipmakers to
meet the government's goal of becoming a global leader in chip production,
according to Yonhap, the South Korean news agency.
Chang pointed out that because TSMC is establishing a factory in Arizona, the
U.S. would likely not support South Korea's filing against Japan at the WTO.
However, a country seeking to file a complaint with the WTO often encounters
difficulty proving the connection between its projected losses and the subsidies
provided by the possible defendant countries, Chang added. Without that direct
link, an action cannot proceed.
U.S. and EU (European Union) regarded China's massive subsidies to support the
semiconductor industry as a major issue, but they still failed to lodge a
complaint with the WTO due to difficulties in producing evidence, " said Chang.
"From a global perspective, TSMC's establishment of a factory in Japan is of
great help in increasing semiconductor supply capacity," Suzuki said.
Companies manufacturing chips solely for use in their own products is a model
that market forces will eliminate, he added, and this will give TSMC, which
makes chips usable by many manufacturers, a long-term advantage.
"However, the factory will not be fully operational until 2024, and there will
be no immediate impact in the short term. The important thing is that Japan is
not very dependent on Samsung's [chips] because they are designed and
manufactured for Samsung's own products. Sony, Mitsubishi, Hitachi and other
products rely on TSMC … more than Samsung, so the impact is very limited, "