Japan backs domestic chipmaking with stimulus package
Image credit: Rainer Plendl/Dreamstime
The Japanese government is to allocate approximately ¥600bn (£3.9bn) from its 2021 stimulus package to support the manufacture of advanced silicon chips, Nikkei has reported.
The world’s largest chip foundry, Taiwan Semiconductor Manufacturing Co (TSMC), was reported to be making plans to start manufacturing chips in Japan. Construction is set to begin in 2022 in western Japan, with production expected to begin by the end of 2024. The chip plant could create 1,500 jobs with a monthly capacity of 45,000 wafers, initially using mature 22nm and 28nm technologies and later moving on to high-end chips.
This would be part of a joint venture with Sony Semiconductor Solutions Corporation, after the two companies signed a deal for a $7bn (£5.3bn) chipmaking plant. Local media has suggested that Denso Corp, a major Japanese autoparts company, may be among the partners in the TSMC-Sony deal.
The announcement was warmly welcomed by the Japanese government.
Now, it has been reported that the government of Japan will provide hundreds of billions of yen to support the project. Prime Minister Fumio Kishida’s record ¥56tn (£360bn) fiscal stimulus included support for chipmakers. Although the government did not specify how much, trade minister Koichi Hagiuda suggested that at least half the costs of the new plant could be covered by public spending.
According to the Nikkei report, of the ¥600bn (£3.9bn) allocated to advanced semiconductor manufacturers, the lion’s share will go towards supporting this TSMC-Sony venture. Nikkei placed the value of government support at ¥400bn (£2.6bn).
The remaining ¥200bn (£1.3bn) will support setting up other factories. A number of projects are under consideration by the Japanese government, including ventures supported by US memory chipmaker Micron Technology and Japan’s own Kioxia Holdings.
“TSMC has been a big topic recently for our national economic security,” said Kishida. “But it doesn’t end there. It’s important we attract US chipmakers and take other action to increase possibilities for the private sector.”
While East Asia dominates the unbalanced global semiconductor market, Japan’s chipmaking capacity has not kept pace with the growth of its neighbours, Taiwan, South Korea and China. For the past three decades, its domestic chipmaking has declined. This has caused disquiet for Japan’s rich electronics ecosystem, which includes companies like Nintendo, Sony, Toyota, Hitachi, Fujitsu and Panasonic.
These companies have been challenged by the global shortage in chips, which is causing severe production disruptions in many industries and countries.
The shortage – which experts say could continue to cause disruption for years – has prompted governments to support domestic chipmaking with large public subsidies. The advantages of domestically manufactured semiconductors have been highlighted by national security concerns, rendering semiconductors a critical strategic technology. China, the US and the EU have all been engaged in efforts to attract chipmakers.
The US has secured some investment, with Intel investing billions of dollars in its New Mexico chipmaking campus and TSMC mulling plans to expand its US chipmaking capacity. Hopes that Intel may build a chipmaking factory in the UK were recently dashed as CEO Pat Gelsinger said the company is no longer considering building a plant there following its departure from the single market.
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