TSMC’s second chip factory will receive US$4.9 billion in subsidies from Japan

Japan said it would provide TSMC with up to an additional 732 billion yen ($4.86 billion) in subsidies to help it build a second chip manufacturing plant, as the Taiwanese company marked the opening of its first Japanese factory on Saturday.

TSMC’s decision to produce chips in Japan has become a key part of Tokyo’s push to revive advanced semiconductor manufacturing and strengthen its industrial supply chains to cope with disruptions caused by rising tensions with neighboring China.

“These chips will be more advanced than the first factory, can be used for artificial intelligence and autonomous driving, and will ensure that we have a stable supply of semiconductors in Japan.” Japanese Minister of Economy, Trade and Industry Takeru Saito told reporters after attending the ceremony. Hosted by TSMC founder Zhang Zhongmou, the first factory in Kumamoto, Kyushu Island, Japan, opened.

The latest financial commitment will increase the funding the world’s largest chipmaker will provide for its first factory, potentially bringing taxpayer-funded subsidies to TSMC to more than 1 trillion yen.

TSMC is also expanding in the United States and Germany and plans to achieve mass production in Japan by the end of this year. According to the Taiwanese company, total investment in the joint venture, including the second factory, will exceed $20 billion.

Once completed, the two factories will have a monthly production capacity of more than 100,000 12-inch wafers, and TSMC will supply technology companies and automakers such as Sony and Toyota Motor.

Japan has also invested in a local chip company, Rapidus, which is working with IBM and European chip research organization Imec to mass-produce cutting-edge chips on the northern island of Hokkaido starting in 2027.

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