A view of the campus of TSMC's first Kumamoto factory in Kikuyo Town. February 12, 2024. (© Kyodo)
Twenty-eight months have passed since Taiwan Semiconductor Manufacturing Company (TSMC) decided to build a factory in Kumamoto Prefecture. TSMC is the largest contract semiconductor manufacturer in the world. Looking at domestic semiconductor trends since then reveals how things change when a top global company expands into Japan.
In response to TSMC's expansion into Japan, domestic semiconductor-related companies have been rapidly increasing their investments in Kumamoto and other prefectures in Kyushu. These companies include those that produce materials and manufacturing equipment for semiconductors.
That is not all. Rapidus recently announced the construction of a plant in Chitose, Hokkaido, aiming to achieve domestic production of next-generation semiconductors.
Powerchip Semiconductor Manufacturing Corporation (PSMC), another Taiwanese semiconductor company, will also establish a factory in Ohira, Miyagi Prefecture. Japanese financial group SBI Holdings will be collaborating with PSMC in this venture.
Stagnating investment in the domestic semiconductor industry is now roaring to life following TSMC's move into Japan.
A Second TSMC Plant
TSMC opened its first Japanese plant in Kikuyo, Kumamoto Prefecture, on February 24. This plant will produce logic semiconductors with line widths between 12 and 28 nanometers (one-billionth of a meter).
Logic semiconductors serve as the "brains" of computers and electronic devices. The narrower the circuit line width of a semiconductor, the higher its performance. However, Japan can currently only produce logic semiconductors up to 40nm.
On February 6, TSMC announced the construction of a second plant in Kumamoto Prefecture, which will produce advanced 6nm semiconductors. Combined with its first plant, TSMC's total investment is expected to exceed $20 billion USD (approximately ¥3 trillion JPY).
There are also significant economic-security implications to consider. Taiwan accounts for more than 60% of the global semiconductor contract manufacturing sector. Furthermore, it holds more than 90% of the world's advanced semiconductor market. With TSMC production bases in Japan, the semiconductor supply chain will be safe in the event of a Taiwan contingency.
Seizing a Golden Opportunity
More important, however, is to leverage TSMC's entry into Japan to revive the domestic semiconductor industry.
Of course, having beaten them in the technology miniaturization race, TSMC is unlikely to disclose its technology to Japanese companies. Nevertheless, Kumamoto will be the site of the world's most advanced semiconductor plants.
Professor Hideki Wakabayashi of Tokyo University of Science's Graduate School recently shared his thoughts on TSMC's Kumamoto factories. A member of the Ministry of Economy, Trade and Industry's Semiconductor and Digital Industry Strategy review committee, he has high expectations. Wakabayashi says, "There's more to learn beyond technology. Business models and education, for example. Kumamoto will become a gateway to the world's most advanced technology."
Japan's Future Semiconductor Engineers
Japan has a high concentration of globally competitive semiconductor-related companies. However, without a leading domestic semiconductor manufacturer, it is highly likely that their production bases will eventually relocate overseas. Keeping them in Japan will be crucial.
Training engineers will be key to rejuvenating the semiconductor industry. Japanese electronics manufacturers have frequently withdrawn or downsized from the semiconductor business, leading to the departure of many skilled personnel from the industry. Without engineers to design semiconductors and operate factories, no level of corporate investment will be able to rescue Japan's semiconductor industry.
In May 2023, the Japan Electronics and Information Technology Industries Association's (JEITA) Semiconductor Board compiled a policy proposal. It was titled "Semiconductor Strategies to Strengthen International Competitiveness." According to the proposal, the eight domestic board-affiliated semiconductor manufacturers will require "40,000 semiconductor personnel over ten years."
Toyooki Mitsui, an adviser in Kioxia Holdings Corporation's Corporate Strategy Department, participated in compiling the report. Mitsui reported, "There is a sense of crisis over the shortage of semiconductor engineers worldwide." Factoring in related industries means even more human resources will be needed.
New Courses at Kumamoto University
Kumamoto University is leading the way in enhancing education for engineers. In April 2022, it established the Research and Education Institute for Semiconductors and School of Informatics. Part of the university's Graduate School of Science and Technology, it aims to nurture engineers through joint research with companies. It was reorganized into the university-wide Research and Education Institute for Semiconductors and Informatics in April 2023.
In April 2024, the university will inaugurate a "School of Informatics," which will offer undergraduate-level education. This program will provide students with specialized courses essential for semiconductor manufacturing, focusing on data science principles.
Kumamoto University is also in discussions with the Ministry of Education, Culture, Sports, Science and Technology (MEXT) regarding new courses. It is in the process of planning a new major tentatively titled "Semiconductors and Mathematical Informatics" for its graduate school. This program will encompass an interdisciplinary field of study focusing on technologies such as semiconductors and artificial intelligence (AI).
The university's Vice President Tsuyoshi Usagawa commented, "The region's semiconductor industry needs human resources. We want to be an educational institution capable of producing human resources to put Japan back at the forefront of the semiconductor industry."
A Worthwhile Investment
The Japanese government will provide TSMC's second plant with approximately ¥730 billion (about $4.9 billion) in subsidies. Combined with the cost of the first plant, the total cost will be a massive ¥1.2 trillion (approximately $8.4 billion). Naturally, such an enormous amount of subsidies means that the program's effectiveness needs to be verified.
Nevertheless, the "TSMC effect" is evident in the growing concentration of semiconductor-related industries and human resource development in Japan. Preventing disruptions in the semiconductor supply chain and revitalizing the domestic semiconductor industry are crucial for Japan's future economic growth. If the program can achieve these two objectives, ¥1.2 trillion would be a small price.
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(Read the article in Japanese.)
Author: Shunichi Takahashi, editorial board member of The Sankei Shimbun
