TSMA to build in Japan, and Arizona

Tower Semiconductor

Some of the newest reports from the semiconductor sector revolve around new productivity with a in international project in Eastern Asia.

The Taiwanese TSMC, the world’s foremost builder of customized chips, plans to make a $7 billion investment in a new Japanese plant in conjunction with Sony. Reuters reports this today, citing a statement by Taiwan’s investment commission of the ministry of economic affairs that reads thusly: 

“The technology that will be used in TSMC’s new plant in Japan is lagging behind what has been applied in Taiwan for at least one generation or more. There should be no doubts about high-end technology outflow.”

Although the project makes sense in the context of the ongoing microchip scarcity, reporting at Digitimes Asia reveals that TSMC had rejected a Japanese welcome in 2019 to build such a plant there.At the time, Kevin Cheng reports from Taipei, Huawei had been blacklisted and the Japanese feared a U.S./China trade war that could disrupt their supply chain.

Cheng also reveals TSMC had been talking to Germany and Singapore prior to its decision to embrace the Japanese plant plan.

Japan, Cheng says, offered certain subsidies that were probably a drawing factor.

TSMC is also working on a 2020 plan to build a new plant in the United States in Arizona, and has issued $743 million in bonds for that purpose.

“Taiwan Semiconductor Manufacturing Company (TSMC) has selected Arizona for its new U.S. advanced semiconductor factory,” reads a statement from the office of AZ Governor Doug Ducey from May of last year. “The project will create over 1,600 new high-tech jobs and generate thousands of additional jobs in the state for suppliers and other companies within the semiconductor industry. TSMC’s total spending on this project, including capital expenditure, will be approximately $12 billion from 2021 to 2029.”

Overall, companies around the world are looking to increase productivity in order to help with a shortage of chips that’s been impacting the automotive industry and other technology sectors.

Keep an eye on how the global shortage resolves with international new production and how that may influence markets.