Taiwanese chip firm to build a $5.3 billion factory in Japan as country seeks semiconductor

Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) and Japanese financial conglomerate SBI Holdings have chosen a site in northern Japan for an 800 billion yen ($5.3 billion) chip manufacturing plant, the two firms said Tuesday.

The first phase of the project in the Miyagi Prefecture north of the capital Tokyo, will require a 420 billion yen investment. PSMC and SBI Holdings will pay for half of the cost of the foundry, with the rest coming from foreign and domestic investors, bank loans and government subsidies, the companies said.

Japan has been looking to boost its domestic semiconductor industry and manufacturing of chips and the massive plant underscores the government’s push in this area.

That comes as the U.S. continues to ramp up export restrictions on key semiconductors and tools to China while trying to increase domestic manufacturing of these components, which go in everything from smartphones to cars.

As demand for semiconductors rises and the technology is increasingly seen as strategically important, other countries, including Japan, are trying to raise their capabilities across the board.

The PSMC and SBI factory will manufacture semiconductors in the 28 nanometer, 40 nanometer and 55 nanometer categories. They are not the cutting-edge chips that go into smartphones, but are key for automotive applications. Japan is home to some of the world’s biggest carmakers such as Toyota and Honda.

The companies did not release information on the construction timeline and when the factory will be operational, but said those details will come when they become more “concrete”.

Japan has been offering subsidies for companies to set up manufacturing facilities in the country.

U.S. memory chipmaker Micron announced in May that it would invest up to 500 billion yen in Japan over the next few years, including into manufacturing.

Meanwhile, Japan has been trying to double down on areas of the semiconductor supply chain where it has had strength in the past. In June, a fund backed by the Japanese government proposed a 903.9 billion yen acquisition of semiconductor materials giant JSR.