By Sam Nussey and Miho Uranaka
Taiwanese TSMC’s Impact on Japan’s Semiconductor Industry
TOKYO, Feb 23 (Reuters) – One of the semiconductor industry’s major players, Chipmaker TSMC 2330.TW, is set to inaugurate its first manufacturing plant in Japan this Saturday. This landmark event shines a spotlight on Taiwan’s pivotal role in Japan’s ambitious plan to revitalize its once-dominant semiconductor manufacturing sector.
Japan’s decision to seek assistance from TSMC TSM.N in an industry it once led underscores the Taiwanese firm’s supremacy in the foundry business. It also underscores Tokyo’s growing unease about China’s expanding dominance in various technological fields.
This development is set against the backdrop of Taiwan’s projected control of two-thirds of foundry capacity for advanced processes by 2027. Despite the U.S.’s aggressive expansion, Japan is poised to increase its global share to 3%, as per TrendForce, a research firm.
Japan’s Chip Industry Growth with TSMC
TSMC is not only eyeing mass production at its Japanese plant later this year but has also announced plans for a second facility, pushing total investments in the project beyond $20 billion. Collaborating with industry giants like Sony 6758.T, Toyota 7203.T, and others, the combined monthly capacity of the two facilities is estimated to exceed 100,000 12-inch wafers, bolstering Japan’s chip supply and supporting key sectors like electronics, automotive, and defense.
According to reports, TSMC views Japan as a conducive environment for this venture due to its industrious work culture and a government known for its ease of engagement and liberal subsidies. Japan, in turn, has benefited from Taiwan’s support in exporting foundry and supply chain technologies, especially for advanced chip manufacturing processes below 16 nanometers.
The Economic Impact and Challenges
Within the chipmaking hub in Kyushu where TSMC’s plant is situated, companies like Rohm 6963.T, Sumco 3436.T, and Tokyo Electron 8035.T are significantly increasing their investments. The regional economic surge is estimated to reach 20.1 trillion yen ($134 billion) over a decade, with benefits extending from the construction and operation of fabs to the spending by employees.
Despite the optimistic outlook, labor shortages pose a significant bottleneck. Major firms may secure necessary personnel, but the economic development of the Kyushu region hinges on recruiting skilled workers locally, as the number of workers in Japan’s chip-related businesses has declined by approximately 20% over the past few decades.
Leading domestic chip companies face the challenge of finding 40,000 workers over the next decade, according to estimates from the Japan Electronics and Information Technology Industries Association (JEITA).
Japan’s Aspirations with Rapidus
While Japan allies with TSMC for immediate gains, it harbors grand ambitions of fostering a domestic champion through the Rapidus foundry venture. Rapidus, located in Hokkaido and scheduled to commence mass production of cutting-edge chips by 2027, aims to rival TSMC by collaborating with IBM IBM.N and chip research organization Imec. However, the industry remains skeptical about Rapidus’s success.
As Japan endeavors to assert itself as a formidable player in the semiconductor arena, Macquarie’s Thong notes that while TSMC’s dominance is unquestionable, Japan is eager to establish its credibility as a strong contender in the global chip manufacturing landscape.
($1 = 150.3100 yen)
(Reporting by Sam Nussey and Miho Uranaka; Additional reporting by Fanny Potkin in Singapore; Editing by Muralikumar Anantharaman)
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