[News] TSMC’s Kumamoto Plant – Semiconductor Bubble or Once-in-a-Century Opportunity?

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TSMC’s establishment of a plant in Kumamoto, Japan, with its opening ceremony scheduled for February 24th, has sparked attention regarding the economic growth benefits it brings.

According to TechNews cited Kumamoto Governor Ikuo Kabashima, TSMC’s investment is expected to bring economic benefits to Kumamoto, reaching JPY 6.85 trillion within 10 years. Governor Kabashima even claimed it as a “once in a century” opportunity for Kumamoto.

Firstly, the most noticeable aspect as per the report is the salary increase.

According to the hiring conditions set by TSMC, starting salaries are JPY 280,000 (roughly USD 1,858.65) for university graduates, JPY 320,000 (roughly USD 2124.18) for master’s degree holders, and JPY 360,000 (roughly USD 2389.70) for PhD holders. With an additional four-month bonus and performance dividends, the package even exceeds the conditions offered to fresh graduates by Japanese company SONY Semiconductor.

Additionally, the hourly wage for dispatched workers is as high as JPY 3,000 (roughly USD 19.91), which is more than three times higher than local companies, prompting other industries to follow suit in retaining employees.

Furthermore, the Kumamoto plant has been mostly completed by 2023, with part of the office building already in use, resulting in 400 employees commuting from Taiwan to work. At the same time, TSMC has announced plans to construct a second fab, with construction expected to commence by the end of the year and operations slated to begin by the end of 2027.

Since TSMC’s investment in Japan, it has also attracted at least 35 related supply chain companies to follow suit with investments, thereby altering the local financial ecosystem.

This is because they must provide loan financing and consultation services for employee housing, among others. Consequently, Japanese financial institutions have also begun to focus on Taiwanese companies, including Kumamoto Bank and banks with nationwide reach.

In addition, as per comprehensive reports from Japanese media, some Japanese citizens believe that the establishment of the TSMC plant has significantly changed the atmosphere of the city, making it more vibrant.

A 32-year-old interior decorator from Kumamoto Prefecture mentioned that there are so many new residential decoration projects that he cannot finish them all, and he spends his salary and tips from his supervisor on nightclub expenses or buying cars. One night, he spent JPY 150,000 just at a hotel.

Another bar owner also revealed that he once encountered a customer with tanned skin who spent JPY 300,000 in one night, speculating that he might be the owner of a construction company. Some customers are decked out in designer brands, and one spent JPY 1 million drinking each day for three consecutive days. Additionally, local supermarkets in Kumamoto have even set up a “Taiwanese Food Section.”

Kikuyo Town, Home to 43,000, May Face the Arrival of the ‘Black Ships’

While TSMC has spurred the economy in Kumamoto, some Japanese media have dubbed it the “Black Ship” and “Semiconductor Bubble.”

With skyrocketing land prices and unprecedented hourly wages, some Japanese business owners are forced to make the decision to close shops because the land has become too expensive, and they may not be able to afford the rent in the future.

As per a report from the Japan Times, Kikuyo Town, home to TSMC’s Kumamoto plant, was originally a town of 43,000 people, but residential land prices have surged by over 20% this year, marking the largest increase in over 30 years.

Apart from soaring hourly wages and housing prices, Kikuyo Town will soon face an influx of over 1,700 employees, putting pressure on the town’s roads and transportation systems. Additionally, the high water consumption of fabs raises concerns among locals about whether industrial water usage will affect domestic water supply.

While TSMC has undoubtedly contributed significantly to the local economy, the most profound impact is felt by long-term residents of the town. Nevertheless, it cannot be denied that TSMC has injected vitality into this aging town, making local life more vibrant and dynamic.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

Read more

• [News] Multiple Fabs in Japan to Commence Production Post-2024 Boosting Industry
• [News] Semiconductor Equipment Sales in Japan Reach Nearly JPY 3.3 Trillion in 2023

(Photo credit: TSMC)