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Semiconductors

TSMC eyes opening Japan chip plant in 2023 to supply Sony

Taiwanese company near decision after due diligence on proposed facility

TSMC is in talks to open its first chip facility in Japan as part of the Taiwanese chip titan's broader push to expand overseas operations.    © Reuters

TAIPEI --Taiwan Semiconductor Manufacturing Co. is finalizing a decision to put its first chip plant in Japan into operation as early as 2023, Nikkei Asia has learned.

The planned plant in Kumamoto, on the island of Kyushu in western Japan, would go forward in two phases, sources with knowledge of the plans told Nikkei Asia. The board of TSMC, the world's leading chipmaker, is expected to decide on the investment in the current quarter. 

Once both phases are in production, the new facility will be able to produce around 40,000 wafers per month using 28-nanometer technology, which is widely used for multiple types of chips including image processors and microcontroller units for automotive applications and consumer electronics.

The plant is expected to be mainly used to make image sensors for Sony, TSMC's largest Japanese customer. Nikkei has been told that TSMC is open to a collaboration that would give Sony more say in operating the plant and negotiating with the Japanese government.

TSMC's decision remains subject to a number of factors, including Japanese government incentives and support, and commitments from local suppliers to building chip-related infrastructure and developing supply chains, according to sources.

Sony declined to comment. TSMC reiterated that it told investors on July 15 that it is conducting due diligence for a wafer factory in Japan, confirming Nikkei Asia's earlier report. TSMC said no further details are available at this time.

TSMC Chairman Mark Liu said the decision on whether to go ahead with the plant in Japan will be made based on "customer needs, operating efficiency, and cost economics."

The investment in the Kumamoto plant would likely be far smaller than the $12 billion TSMC is spending to build a facility in Arizona in the U.S., which will use more advanced 5-nanometer technology. The U.S. accounted for more than 60% of the chipmaker's revenues in 2020, while Japan was less than 5%.

TSMC, which counts Apple, Google and Facebook among its major clients, is also expanding its plant in Nanjing, China.

Liu has said the company needs to expand its global production footprint to stay competitive and serve clients, particularly with the growing need for secure semiconductor deliveries in a changing geopolitical environment.

China, the European Union, Japan and the U.S. are all making efforts to bring vital semiconductor production onshore amid concerns over national security and an unprecedented shortages that exposed the fragility of the supply chain.

The Japanese plant will be another step away from TSMC's original strategy of concentrating chip production in Taiwan. Morris Chang, the company's founder and former chairman -- widely regarded as the godfather of Taiwan's semiconductor industry -- recently warned that efforts to bring chip production onshore could prove costly and not yield the self-sufficiency sought.

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