According to a report by Nikkei News, Japan’s official support for the semiconductor industry expenditure, relative to its gross domestic product (GDP), is significantly higher than that of the United States and other major Western countries.

Figures submitted by a subcommittee under Japan’s Ministry of Finance’s Fiscal System Council show that Japan will invest JPY 3.9 trillion (approximately USD 25.7 billion) over the next three years, equivalent to 0.71% of its GDP. In comparison, the United States will invest more, with JPY 7.1 trillion over five years, but this represents only 0.21% of its GDP, less than one-third of Japan’s ratio.

Over the next five years, France’s expenditure amounts to JPY 700 billion, equivalent to 0.2% of its GDP. Germany’s expenditure stands at JPY 2.5 trillion, equivalent to 0.41% of its GDP.

On Monday, the U.S. Department of Commerce announced a direct subsidy of up to USD 6.6 billion to TSMC, aiming to attract more investments from TSMC within the United States. Meanwhile, in Japan, TSMC secured approximately JPY 1.2 trillion (USD 7.5 billion).

Nikkei notes that Japan’s JPY 3.9 trillion investment in the semiconductor industry involves supplementary budgets, leading to a sharp increase in spending. Thus, the Ministry of Finance is concerned about the lack of funding sources for official support of semiconductor manufacturing. According to Nikkei News, only over JPY 500 billion of Japan’s semiconductor industry expenditures have been covered by actual funds.

One funding source is GX bonds, which the government has started issuing for economic green transformation to achieve net-zero emissions by 2050. GX bonds are expected to raise approximately JPY 20 trillion over the next decade, to be repaid using carbon tax revenue.

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.

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• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab
• [News] Subsidies to TSMC from Japan and China Increase Over Fivefold Annually

(Photo credit: TSMC)

At the time when Japan is strengthening the construction of its semiconductor supply chain, as per a report from the Japan Times, Japanese photoresist giant Shin-Etsu Chemical is rumored to build a chip material plant in Gunma Prefecture, Japan, which marks its first new domestic manufacturing base in Japan over the past 56 years.

It’s reported that Shin-Etsu Chemical plans to invest approximately JPY 83 billion (USD 547 million) in Isesaki City, northern Tokyo, Gunma Prefecture, Japan to construct a factory covering an area of around 150,000 square meters, which is scheduled to be completed in 2026.

This new base, to produce photoresist and other materials used in semiconductor lithography processes, will become the strategic center for Shin-Etsu Semiconductor Materials, exporting to South Korea, the United States, and other regions. The company also plans to conduct research and development there eventually.

Public data shows that Shin-Etsu Chemical holds about 20% of the global photoresist market, especially in advanced product field, where it aims to capture at least 40% market share. Currently, the company mainly produces photoresist in Taiwan and Niigata Prefecture, Japan.

Japan has long held a strong global market position in upstream semiconductor aterial markets, especially in areas such as silicon wafers and photoresist, where its market dominance remains unshaken.

Currently, many Japanese companies are expanding production and conducting research and development. Industry sources indicate that Mitsui Chemicals is expanding a factory in Yamaguchi Prefecture to produce films, which are used to protect photomasks from dust and damage during the lithography process.

Mitsui Chemicals will invest between JPY 5-9 billion and begin mass production in 2025 or 2026. Fuji Film has also started domestic production of CMP slurry for wafer polishing in Japan, and Nippon Sanso Holdings plans to start producing neon gas (Used in the chip manufacturing process) in Japan around 2026.

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• [Insights] Analysis of the Global Photoresist Market in 2023

(Photo credit: TSMC)

As the U.S. Department of Commerce finalizes subsidies for Intel and TSMC, the two major semiconductor manufacturers will enter a new competitive landscape in the United States.

In preparation for these new challenges and with the first fab trial production imminent, sources cited by a report from Liberty Times has revealed that TSMC will dispatch Vice President of Manufacturing Operations, Arthur Chuang, to oversee the Arizona site in May. He will collaborate with TSMC’s vice president of fab operations Dr. Y.L. Wang, signaling TSMC’s accelerated efforts to establish and produce at U.S. fabs concurrently, aiming to achieve a competitive advantage in advanced manufacturing processes in the United States.

Arizona Fab to Begin Trial Production of 4,000 Wafers by Month’s End

Following the confirmation of subsidies for Intel and TSMC by the U.S. Department of Commerce, subsidies for Samsung are also rumored to be announced soon. Industry sources cited in the report from Liberty Times believe that the United States, through these subsidies promoting domestic chip manufacturing and with major clients gathering, will become the primary battlefield for investment in advanced manufacturing processes.

However, with high production costs and the need to rebuild supply chains, TSMC has adjusted its strategy following a series of setbacks at its first fab. After more than a year of installation work, the fab is nearing completion and preparing to embark on a new phase with trial production of approximately 4,000 wafers using 4-nanometer processes by the end of this month. The target is to ramp up production by the first half of 2025, making this facility the most advanced semiconductor fab in the United States.

TSMC’s U.S. fab is facing new challenges as it continues to build and produce concurrently. According to the same report citing industry sources, unlike the previous director-level executive overseeing operations at the U.S. fab, TSMC will be assigning a vice president-level executive to lead the site, with experienced fab construction veteran Arthur Chuang slated for a long-term assignment in the United States starting in May.

Arthur Chuang holds a Ph.D. in Civil Engineering from National Taiwan University and joined TSMC 35 years ago as an equipment engineer. He transitioned to fab operations over 25 years ago and has overseen the construction of nearly 20 fabs, including Fab 15 in Tainan, Fab 18 in Southern Taiwan, and the advanced 2-nanometer fab sites in Hsinchu and Kaohsiung.

TSMC’s second semiconductor fab in the United States is currently under construction, with plans announced on April 8th to commence production of next-generation 2-nanometer process technology in 2028. Additionally, a third fab is scheduled to begin mass production of 2-nanometer or more advanced process technologies by the end of 2030.

The total area of TSMC’s U.S. fab is 1,100 acres, which is more than half of its area in the Hsinchu Science Park. Estimates from the supply chain suggest that this site could accommodate up to six fabs, indicating that TSMC’s expansion plans may go beyond just building a third fab. If collaboration with U.S. partners proceeds smoothly, further expansion is also possible in the future.

TSMC’s Kumamoto Fab Phase 2 to Commence Construction by Year-End, Production Set for 2027

Additionally, TSMC’s Japan Kumamoto Fab (JASM) announced yesterday that its Phase 2 facility will be located adjacent to Phase 1 on the east side, covering an area of approximately 320,000 square meters, which is about 1.5 times the size of Phase 1. Construction is scheduled to commence by the end of this year, with production expected to start by the end of 2027.

TSMC is scheduled to hold an earnings call on April 18th, and ahead of the conference, positive news has emerged regarding the new US fab. It is anticipated that the related topics will also be the focus of attention on the day of the conference.

Read more

• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab
• [News] TSMC’s US Fab Reportedly Eyeing for Early Mass Production

(Photo credit: TSMC)

Japan and the EU are reportedly set to launch formal cooperation in the research and development of advanced materials, such as chips and electric vehicle batteries. According to a report from NIKKEI, this initiative aims to decrease their high reliance on suppliers from China. Iliana Ivanova, Commissioner for Innovation and Research at the EU, revealed that the two parties will establish a collaborative framework in April.

As per the same report, Commissioner Ivanova stated during an interview that both Japan and the EU remain globally leading in advanced materials innovation. In 2020, the EU’s investment in this industry totaled EUR 19.8 billion, while Japan’s amounted to EUR 14 billion.

Under the framework tentatively named “Dialogue on Advanced Materials,” Japan and the EU plan to hold regular meetings to discuss collaboration proposals. Institutions engaged in advanced materials research from both sides will also participate. Commissioner Ivanova highlighted that the areas of cooperation include renewable energy, transportation, construction, and electronic materials. She also expressed hope for Japan and the EU to jointly develop international standards for advanced materials.

The report highlights a specific area of focus: the development of sodium-ion batteries, which are seen as the most promising next-generation power source for electric vehicles.

In recent years, the rapid growth of the global electric vehicle and energy storage markets has driven robust demand for lithium-ion batteries. As per TrendForce’s data, with further expansion expected in these sectors, the demand for lithium batteries is projected to continue growing, surpassing 3200GWh in global shipments by 2027.

Currently, China dominates the global lithium battery supply chain system, including battery metal refining, battery material processing, and battery manufacturing. Per TrendForce, more than 75% of lithium batteries worldwide are currently produced in China, making it the global leader in lithium battery manufacturing capacity.

In regard to China’s competitive advantage in the LiBs field today, it’s difficult for Japanese and South Korean companies to surpass. And it’s even more challenging for the US and Europe to catch up with China, due to the weak foundation of LiB industry locally. However, the emergence of inexhaustible and inexpensive sodium batteries may have offered a solution for the world to reduce its reliance on China.

Sodium-ion batteries do not require the use of rare metals controlled by China and have lower production costs compared to traditional batteries. The EU hopes to make progress in this area to meet the increasing demand brought about by the transition to electric vehicles.

Additionally, the EU aims to leverage Japan’s leading knowledge in metal nanoparticle technology, which can enhance solar energy conversion efficiency. Nanoparticle materials can also help smartphones save energy. In the future, the EU plans to allocate significant funding to advanced materials research, fully supporting related research and large-scale production.

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• [News] Japanese Semiconductor Equipment Sales Smashed the JPY 300 Billion Threshold in February
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On March 25, the Semiconductor Equipment Association of Japan (SEAJ) disclosed its latest statistics.

The data revealed that in February 2024, the sales of Japanese semiconductor equipment (3-month moving average, including exports) reached JPY 317.418 billion, representing a growth of 7.8% compared to the same month last year. This also marked a second back-to-back month of growth, achieving the largest increase in 10 months (9.8% growth since April 2023).

Moreover, monthly sales crossed the 300 billion-yen threshold for the fourth consecutive month, hitting a new high over the 10 months (JPY 336.162 billion since April 2023).

Compared to the previous month, Japanese semiconductor equipment sales rose by 0.8%, marking the fourth consecutive month of monthly growth. In the cumulative period from January to February 2024, its sales stood at JPY 6,322.93 billion (+6.4% YoY), setting a new record high in the same period of previous years.

Semiconductor equipment manufacturers from Japan include Tokyo Electron (TEL), Advantest, Screen, Kokusai Electric, Hitachi High-Tech, Nikon, and Canon, etc.

Read more

• [News] Subsidies to TSMC from Japan and China Increase Over Fivefold Annually
• [News] Semiconductor Equipment Sales in Japan Reach Nearly JPY 3.3 Trillion in 2023

(Photo credit: SEAJ Official Website)