According to sources cited by Reuters,  TSMC is reportedly considering plans to establish a production line for its CoWoS technology in Japan. However, TSMC has yet to make any further decisions, and they have declined to comment on the matter.

CoWoS is an advanced packaging technology that stacks chips to enhance computing power, reduce energy consumption, and save space. Currently, TSMC’s CoWoS production capacity is entirely located in Taiwan.

With the booming development of artificial intelligence, global demand for advanced semiconductor packaging has surged, prompting chip suppliers like TSMC, Samsung, and Intel to strengthen their advanced packaging capabilities.

Previously, TSMC’s CEO, C.C. Wei, stated that the company plans to double its CoWoS output by the end of 2024 and further increase it in 2025. With TSMC recently completing the first phase of construction for its Kumamoto fab in Japan and announcing plans for the second phase, which will involve collaboration with Japanese companies SONY Semiconductor Solutions and Toyota Motor Corporation, with a total investment exceeding USD 20 billion and utilizing 6/7-nanometer advanced processes.

However, Joanne Chiao, an analyst at market research firm TrendForce, suggests that if TSMC establishes advanced packaging capacity in Japan, it may face limitations in scale. It remains unclear how much demand there is in Japan for CoWoS packaging, but most of TSMC’s CoWoS customers are currently in the United States.

Additionally, sources cited by Reuters’ report indicate that TSMC’s competitor, Intel, is also considering establishing an advanced packaging research facility in Japan to deepen ties with local chip supply chain companies.

Meanwhile, Samsung, another competitor of TSMC, is setting up advanced packaging research facilities in Yokohama, Japan, with government support. Furthermore, Samsung is in discussions with Japanese and other companies regarding material procurement, preparing to launch its packaging technology similar to that used by SK Hynix.

Regarding the development of the semiconductor industry in Japan, as mentioned in a previous report from TrendForce, 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.

However, the looming shortage of semiconductor talent in Japan is a concern. In response, there are generous subsidy programs for talent development. Japan is strategically positioning itself to reclaim its former glory in the world of semiconductors.

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• [News] Subsidies to TSMC from Japan and China Increase Over Fivefold Annually
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(Photo credit: TSMC)

Geopolitical factors are driving countries to actively establish semiconductor manufacturing locally and offer subsidies. According to TSMC’s annual report, subsidies received from Japan and China amounted to NTD 47.545 billion in 2023, signaling a 5.74-fold increase from the previous year, reaching a record high. In contrast, the report also suggest the subsidies from the US government have yet to materialize.

TSMC did not specify the individual amounts of subsidies from the Japanese and Chinese governments. However, estimations cited by the report suggest that the Japanese government, aiming to revitalize the semiconductor industry, subsidized TSMC’s Kumamoto plant with up to JPY 476 billion, likely serving as the primary driver behind the substantial increase in TSMC’s subsidies in 2023.

The construction of TSMC’s Kumamoto Fab began in April 2022, with full assistance from the Japanese central and local governments. Recently, the opening ceremony was held, and trial production has commenced, with mass production expected in the fourth quarter of this year.

The subsidies from the Japanese and Chinese governments to TSMC are mainly used to subsidize the costs of real estate, buildings, and equipment purchases, as well as some of the costs and expenses associated with building construction and production operations.

On the other hand, TSMC’s US fab began construction in early 2021, with a grand tool-in ceremony held in December 2022, attended by the US President. Initially planned to invest USD 12 billion, the facility aims to build a N5 process fab with a monthly capacity of 20,000 wafers. Construction was scheduled to commence in 2021, with mass production slated to begin by the end of 2024, creating approximately 1,600 job opportunities in the local area.

However, it was previously reported by the TechNews that due to the delay in the first phase’s production timeline from the end of 2024 to the first half of 2025, the production schedule for the second phase will also be postponed to start after 2027. Subsequently, the production schedule has been pushed from this year to next year.

Despite the US government’s declaration to reinvigorate manufacturing and the introduction of the “CHIPS Act,” totaling USD 52 billion in subsidies, only three US companies have been subsidized so far.

These include BAE Systems, Microchip, and the third-largest foundry, Global Foundries, with Global Foundries receiving the most substantial subsidy of USD 1.5 billion. As of now, subsidies for TSMC have yet to be finalized.

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(Photo credit: TSMC)

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.

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(Photo credit: TSMC)

2020 was undoubtedly a milestone year in the development of TSMC, the leading semiconductor foundry. According to a report from TechNews, TSMC’s global expansion has reached locations in China, the United States, Japan, and Germany, solidifying its goal of being a “long-term and trustworthy provider of technology and capacity.”

On February 24th, TSMC will hold an opening ceremony for the Kumamoto plant, which is scheduled to commence production by the end of the year. With the opening of the Kumamoto plant, let’s review TSMC’s global expansion plan:

Arizona, United States

In May 2020, TSMC officially announced the selection of Arizona, United States, as the location for constructing an advanced process fab.

Initially planned to invest USD 12 billion, the facility aims to build a N5 process fab with a monthly capacity of 20,000 wafers. Construction was scheduled to commence in 2021, with mass production slated to begin by the end of 2024, creating approximately 1,600 job opportunities in the local area. Subsequently, in 2022, TSMC announced plans to start N4 advanced process production at the Arizona fab to meet market demands.

In December 2022, the second phase of construction began at the fab in Arizona, United States. It is expected to commence production using N3 process technology by 2026. The total investment for both phases amounts to approximately USD 40 billion, creating 4,500 jobs opportunities at TSMC.

Upon completion of both phases, the combined annual capacity will exceed 600,000 wafers, with the market value of end products estimated to exceed USD 40 billion. This project ranks as one of the largest foreign direct investment projects in US history.

However, due to the delay in the first phase’s production timeline from the end of 2024 to the first half of 2025, the production schedule for the second phase will also be postponed to start after 2027.

Kumamoto, Japan

In October 2021, TSMC, in collaboration with its customer Sony Group’s wholly-owned subsidiary, Sony Semiconductor Solutions, announced the establishment of a subsidiary called Japan Advanced Semiconductor Manufacturing (JASM) in Kumamoto, Japan. Sony Semiconductor Solutions plans to invest approximately USD 500 million to acquire up to 20% of the shares of JASM.

Following this, Denso, a major Japanese automotive components manufacturer, also announced its investment in JASM. TSMC further increased its investment in the Kumamoto plant, raising the investment amount to nearly JPY 1 trillion.

It plans to introduce 12/16-nanometer processes in addition to the originally planned 22/28-nanometer processes, with a monthly capacity reaching 55,000 wafers. This project has received commitments of support from the Japanese government, with an expected subsidy of approximately JPY 476 billion.

It was previously rumored that one of the shareholders of JASM, Sony Semiconductor, was urged by its customer, Apple, to expedite the production of image sensors (CIS) at the Kumamoto plant. Consequently, trial production began even before the opening of the Kumamoto plant. However, TSMC responded that the production timeline remains according to plan and is scheduled to commence before the end of 2024.

Recently, TSMC announced a new project in collaboration with its Japanese partners Sony Semiconductor, Denso Corporation, and Toyota Motor Corporation to invest in JASM and construct a second fab, scheduled to commence operations by the end of 2027.

TSMC stated that in response to customer demand, construction of the second JASM fab in Japan is slated to begin by the end of 2024. The expansion of production capacity is also expected to optimize the overall cost structure and supply chain efficiency of JASM.

In the future, the two fabs under JASM will enable a total monthly production capacity of over 100,000 12-inch wafers, providing 40-nanometer, 22/28-nanometer, 12/16-nanometer, and 6/7-nanometer processes for automotive, industrial, consumer, and high-performance computing (HPC) applications.

Capacity planning may be adjusted according to customer demand, with the Kumamoto plant directly creating a total of over 3,400 high-tech job opportunities. Through the investment, TSMC, Sony Semiconductor, Denso Corporation, and Toyota Motor Corporation hold approximately 86.5%, 6.0%, 5.5%, and 2.0% of the JASM shares, respectively.

Dresden, Germany

In August 2023, TSMC, along with Robert Bosch GmbH, Infineon Technologies AG, and NXP Semiconductors N.V., jointly announced plans to invest in the European Semiconductor Manufacturing Company (ESMC) located in Dresden, Germany, to provide advanced semiconductor manufacturing services.

TSMC stated that the ESMC represents a significant step forward in the construction of a 12-inch fab to support the future capacity demands in the rapidly growing automotive and industrial markets. The final investment decision is subject to confirmation of government subsidies.

This project is developed within the framework of the European Chips Act. Following approval by regulatory authorities and meeting other conditions, TSMC will hold a 70% stake in the joint venture, while Bosch, Infineon, and NXP will each hold a 10% stake. The fab will be operated by TSMC.

TSMC emphasized that the fab planned for this project is expected to utilize TSMC’s 28/22-nanometer Complementary Metal-Oxide-Semiconductor (CMOS) technology and 16/12-nanometer FinFET processes, with a monthly capacity of approximately 40,000 12-inch wafers.

Through advanced FinFET technology, the aim is to further strengthen the semiconductor manufacturing ecosystem in Europe and create approximately 2,000 direct high-tech job opportunities. ESMC aims to commence construction of the fab in the second half of 2024, with production slated to begin by the end of 2027.

Continuing Advancements in Advanced Processes in Taiwan

In addition to its overseas expansions, TSMC continues to advance its most cutting-edge processes and advanced packaging technologies in Taiwan.

Given the strong demand for N3 process technology over the years, TSMC is expanding the N3 process capacity at its Tainan Science Park. Additionally, in preparation for the commencement of mass production of N2 process technology in 2025, TSMC plans to establish multi-stage N2 process technology capacity in the science parks of Hsinchu and Kaohsiung.

In Hsinchu’s Baoshan area, the first phase has been completed, and TSMC’s Global R&D Center has been in use since 2023. Baoshan Phase Two will serve as the base for TSMC’s N2 process technology.

Additionally, TSMC plans to construct two 2-nanometer advanced process fabs in Kaohsiung. The related land pollution remediation projects are expected to be completed by the end of 2024.

Finally, regarding the urban planning amendment for the expansion of the Central Taiwan Science Park Phase II, which concerns TSMC’s layout for constructing 2-nanometer fabs, TSMC also indicated that the review progress by the Taichung Science Park Administration is proceeding as scheduled.

This development will allow the land in the Central Taiwan Science Park to be handed over to TSMC for use as early as 2024, enabling subsequent commencement of the construction of the fabs.

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(Photo credit: Intel)

Industry sources cited by the Liberty Times Net have pointed out that the Kumamoto plant holds significant importance for both Taiwan and Japan, as Japan is expected to look for attracting investments from TSMC, Intel, and Samsung to establish manufacturing facilities in the country.

TSMC stands out as essential due to its critical role as a key supplier to Apple, whose products are also utilized by the US military. Under geopolitical considerations, Apple needs to diversify its production beyond Taiwan and China. Therefore, it may hope TSMC can provide chip production in Japan soon and establish comprehensive advanced packaging services in the future. It seems inevitable that TSMC will eventually invest in setting up advanced packaging facilities in Japan.

Establishing Comprehensive Advanced Packaging Services

The TSMC Kumamoto plant commenced construction in April 2022 and was completed in just one year and eight months. While the construction of the US plant began in early 2021, setbacks in construction has led to the postponement of the production schedule from this year to the next.

Japan is also facing severe labor shortages, but the construction industry in Japan has made significant progress. It is highly industrialized, utilizing modular structures prefabricated in plants and then transported to construction sites for installation, thus reducing the need for on-site labor. In the construction of the Kumamoto plant, Japan’s construction firm, Kajima Corporation, was the general contractor.

German Construction Firm Sends Team to Learn from Japan

The German government actively subsidizes efforts to attract TSMC to invest in establishing  plants. In August last year, TSMC finalized partnerships with Bosch, Infineon, and NXP Semiconductors to form the European Semiconductor Manufacturing Company (ESMC) in Dresden, Germany.

According to a report from Liberty Times Net, construction is expected to begin in the second half of this year, with mass production slated to start by the end of 2027. It is also reported that Exyte, a German engineering services firm (formerly known as M+W), has recently sent a team to learn from the Kumamoto plant.

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(Photo credit: TSMC)