Big Boost To Erstwhile Chipmaking Champion Japan's Bid To Regain Old Glory As TSMC-Sony Seal Deal To Build $7 billion Fab Factory In Kumamoto

TSMC (Taiwan Semiconductor Manufacturing Co), the world's leading chipmaker and Sony Semiconductor Solutions Corporation on Tuesday (Nov 9) announced that they will jointly build a new chip manufacturing unit in Japan and start producing chips by 2024.

TSMC-Sony joint venture will make an initial investment of $7 billion to establish the chip manufacturing plant. Construction of the chip plant is scheduled to commence in 2022

The joint venture company, to be called Japan Advanced Semiconductor Manufacturing, Inc. (“JASM”), will be set up in Kumamoto, Japan to provide foundry service with initial technology of 22/28-nanometer processes to address strong global market demand for specialty technologies. Sony will invest up to $500 million and will hold no more than a 20% stake in the joint company.

TSMC board also announced that it will build an additional domestic chipmaking facility in the city of Kaohsiung, with production slated to begin in 2024. The plant will make cutting-edge 7-nanometer chips, as well as less-advanced 28-nanometer chips, the company said.

Japan's Chip Ambitions

Japan is set invest at least ¥1 trillion ($9 billion) toward chip development this fiscal year and trillions more after that in a bid to revive its national industry.

Japan is currently pursuing an all-out strategy to lure overseas semiconductor companies, including designing generous financial incentives.

Japan lags behind South Korea and Taiwan in advanced chip manufacturing. It imports more than 60% of its semiconductors, much of them from Taiwan and China.

The 10-nanometer (nm) chips that drive smartphone is dominated by chip manufacturers from Taiwan and South Korea, 28nm technology used in automobiles is mostly produced in Taiwan and China.

Local Japanese player Renesas Electronics can mass-produce only up to 40nm chips domestically.

In June this year, Japan signed an US$338 million semiconductor research project to develop cutting-edge chip technology in the country with the market-leading TSMC. The move was seen as an attempt to boost Japan's competitiveness in the chip manufacturing sector, Around 20 Japanese companies will work with TSMC on this project. Japanese government will be funding half the project cost.

Japan’s share of global semiconductor sales plummeted to just 10% in 2019, down from 50% in 1988. The country still has 84 chip factories, the most in the world, but they’re not producing enough high-end products. As a result, Japan now has to import 64% of its semiconductors.

NEC, Toshiba and Hitachi were widely regarded as the pioneers in semiconductor industry during 1980s and 1990s. But this began to change in the 2000s as chip design became uncoupled from manufacturing, leading to the rise of foundries like TSMC

Also Read: Chip Wars: Erstwhile Chipmaking Champion Japan Plots A Plan To Regain Lost Glory In Semiconductor World But A Lot Still Depends On TSMC