Semiconductor Equipment

TSMC to build second chip fab in Japan

07 February 2024
A wafer manufactured at a TSMC fab. The largest global semiconductor vendor by revenue plans to build a second fab with partners SSS, Denso and Toyota. Source: TSMC

The newly crowned world’s largest semiconductor vendor by revenue, Taiwan Semiconductor Manufacturing Co. (TSMC), will build a second semiconductor fab in Kumamoto Prefecture, Japan, in response to rising demand for microchips.

The second fab, which is part of a joint venture called Japan Advanced Semiconductor Manufacturing Inc. (JASM), will start construction by the end of this year, TSMC said. Sony Semiconductor Solutions (SSS), Denso Corp. and Toyota Motor Corp. will further invest in JASM with TSMC owning a majority stake.

The second fab is slated to begin operations by the end of the 2027 calendar year.

With the introduction of the new fab, Toyota will take a minority stake in JASM and the overall investment in the chip manufacturing joint venture will exceed $20 billion with support from the Japanese government.

With this investment TSMC, SSS, Denso and Toyota will hold equity stakes in JASM of about 86.5%, 6.0%, 5.5% and 2.0%, respectively.

Both JASM fabs at the Kumamoto site will offer a production capacity of more than 100,000 12-inch wafers per month starting with 40, 22/28, 12/16 and 6/7 nanometers process technologies. The semiconductors built at the fabs will be used in automotive, industrial, consumer and HPC-related applications.

For Denso and Toyota, the JASM fab will give the vendors a guaranteed supply of semiconductors for their automotive parts and vehicles. For SSS, it gives them a supply of image sensors and other chips for their devices.

Why it matters

Semiconductor manufacturing is rapidly expanding beyond the traditional aggregation of Asia — specifically Taiwan, Korea and China — with the U.S., Europe and Japan all investing heavily in domestic semiconductor fabs.

There are several reasons for this. First, the vulnerability of the semiconductor supply chain became very apparent during COVID-19 when lockdowns hindered the ability of getting some parts needed for certain electronic sectors leading to electronic shortages globally, specifically in the automotive and industrial sectors.

Secondly, countries saw an opportunity to grow their domestic semiconductor manufacturing at a time when chip demand is soaring in all areas. In fact, the Semiconductor Industry Association forecasts over the next decade semiconductor demand will grow 5%.

Many of these regions have already set aside incentives for companies to build new fabs, packaging factories and R&D facilities like the European Chips Act in Europe, the CHIPS and Science Act in the U.S. and Japan’s own subsidy program. These programs will award billions to improve the semiconductor supply chain in their regions.

For TSMC, the company is working to remain the world’s largest foundry while diversifying its own presence globally to also reduce the risks to its own supply chain. While TSMC is building multiple fabs domestically in Taiwan, it is expanding to additional countries like Japan, Europe and the U.S.

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