Tokyo pledges a further $4.9 billion to help TSMC expand Japan production

Japan said it will give TSMC up to 732 billion yen ($4.86 billion) more in subsidies to help it build a second chip fabrication plant as the Taiwanese company on Saturday marked the opening of its first Japanese factory.

TSMC's decision to build chips in Japan has become a key component of Tokyo's push to revive advanced semiconductor manufacturing and harden its industrial supply chains against disruptions as tensions with neighbouring China grow.

"The chips will be more advanced than the first factory and can be used for AI and autonomous driving, and will ensure we have stable supply of semiconductors in Japan," Minister of Economy, Trade and Industry Ken Saito told reporters after attending a ceremony for the opening of the first factory in Kumamoto on Japan's Kyushu island, hosted by TSMC's founder Morris Chang.

The latest financial commitment, which will add to money given to the world's biggest chipmaker for its first factory, could push taxpayer-funded subsidies for TSMC beyond 1 trillion yen.

TSMC, which is also expanding in the US and Germany, plans to ramp up to mass production in Japan before the end of the year. Total investment in the venture, including a second plant, will exceed more than $20 billion, according to the Taiwanese company.

When completed, monthly capacity across the two factories will exceed 100,000 12-inch wafers that TSMC will supply to technology firms and carmakers including Sony and Toyota Motor .

Japan is also investing in a homegrown chip venture, Rapidus, which is partnering with IBM and Imec, a European chip research organisation, in a bid to mass produce cutting-edge chips on the northern island of Hokkaido from 2027.