TSMC Might Relocate to Japan Amid Taiwan Regional Tensions
Taiwan Semiconductor Manufacturing Company (TSMC) is talking about expanding into Japan as it seeks to lower geopolitical risk in the face of escalating China-US tensions.
According to The Wall Street Journal, the Japanese government has indicated that it would want TSMC to expand beyond a facility already under construction. However, no decision has been taken, and TSMC is still researching the viability. The Taiwanese business is constructing its first chip manufacturing facility in Japan on the southern island of Kyushu. It supplies chips for a wide range of high-end electronics goods, including those made by Apple Inc. The Japanese government is funding the multibillion-dollar factory.
Since last year, when severe chip shortages held back the auto industry and other sectors, the semiconductor market has been in disarray. The U.S. and its allies, including Japan, are concerned about the expansion of the Chinese semiconductor sector and the concentration of chip manufacturing in Taiwan, a sovereign island that Beijing claims as part of its territory.
To address these challenges, TSMC is building a facility in Japan that will increase production capacity in an ally of the United States. The factory is slated to concentrate on less-advanced semiconductors frequently seen in automobiles and components like sensors, and it will begin shipping commodities in late 2024. The factory is being constructed by a business named Japan Advanced Semiconductor Manufacturing, which is owned mainly by TSMC.
The U.S.-China trade conflict and the escalation of cross-Strait tensions have brought more severe challenges to all industries, including the semiconductor industry.”
– TSMC Chairman Mark Liu via Reuters
People participating in the TSMC project said the government subsidies would help overcome construction challenges in Japan, including limited power supply and the possibility of earthquakes and other natural calamities. The demand for semiconductors has recently decreased due to the slowing sales of smartphones and personal computers. In response to the sluggish market and increased prices, TSMC reduced its investment plans for this year.
TSMC isn’t the only tech company transferring production to locations where China has a minor direct effect. According to Apple, Foxconn in India will produce some of the upcoming iPhone 14. A portion of Apple product assembly has also been outsourced to Vietnam by Foxconn, a company with a substantial presence in China.
Many businesses with manufacturing lines in the region have suffered due to territorial disputes initiated by China. It will be interesting to observe how TSMC handles the move to Japan.