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TSMC Explores Third Factory in Japan for Cutting-Edge 3nm Chip Production

TSMC contemplates constructing a third factory in Kumamoto, Japan, potentially producing advanced 3nm chips for major clients like NVIDIA, marking a significant move toward Japan becoming a global chip manufacturing hub
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Taiwan Semiconductor Manufacturing Company (TSMC) is actively considering the establishment of a third factory in Kumamoto Prefecture, Japan, tentatively named TSMC Fab-23 Phase III. The undisclosed project is expected to contribute to the production of cutting-edge 3nm chips for leading clients, including NVIDIA.

The 3nm manufacturing process represents the pinnacle of current chip technology. While TSMC’s third factory, if realized, may operate one to two generations behind in technology, its significance is paramount for Japan. The move aligns with Prime Minister Fumio Kishida’s government, which has been incentivizing investment with substantial subsidies to bolster the semiconductor sector domestically.

Despite potential challenges such as limited land availability in Japan, TSMC’s strategy signals a robust commitment to global diversification, crucial in light of geopolitical tensions related to the Taiwan Strait. A 3nm fabrication facility could entail an estimated cost of around $20 billion (NT$627.3 billion), with the precise figures contingent on construction timing, land acquisition, and material resourcing. The Japanese government typically covers approximately 50% of such facility costs.

TSMC’s prospective venture follows similar commitments from Micron Technology, Samsung Electronics, and Powerchip Semiconductor Manufacturing Company in Tokyo. Japanese officials are actively supporting domestic startup Rapidus Corp. in establishing a state-of-the-art 2-nanometer wafer production line in Hokkaido, further underscoring Japan’s proactive stance in semiconductor manufacturing. This initiative also responds directly to funding delays under the U.S. chip bill, showcasing Japan’s determination to remain at the forefront of the sub-5nm chip market.

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