Following TSMC’s decision to set up a fab in Japan last week, Japan is mulling to set up a fund dedicated to domestic semiconductor investment, with TSMC being the first recipient of its subsidies. Takayuki Kobayashi, the head of Japan’s newly created Ministry of Economic Security, remarked that TSMC’s new fab in Japan would mark the country’s first step to revive its faltering semiconductor industry. According to Kobayashi, Japan needs a long-term semiconductor strategy on par with that of China and the United States, or remains in oblivion.
Echoing Kobayashi, Kōichi Hagiuda, Japan’s Minister of Economy, Trade and Industry, also agreed that the country needed economic measures that would put Japan on the same footing with other countries. The minister plans to swiftly secure a designated budget and establish a subsidy mechanism. Japan’s newly appointed Prime Minister, Fumio Kishida, expressed the necessity to allocate sufficient governmental budget to subsidize future grandiose private investments, such as those from TSMC.
Subsidies of such a nature, however, risk violating WTO rules, and consequently drawing protests from South Korea, Japan’s main technology rival. Kishida stressed that TSMC would have to abide by Japan’s subsidy conditions, including prioritizing Japanese clients. If the conditions are not met, TSMC will have to return the subsidies.
Currently, TSMC plans to build a 28nm fab in Japan, focusing on speciality technologies. The Taiwanese foundry also points out that the Japanese plan is not included in its previously allocated US$100 billion expenditure to expand capacity in the coming three years. The Japanese project is expected to cost TSMC 1 trillion yen (US$8.8 billion), half of which is expected to be covered by the Japanese government . Coincidentally, an expert panel in June, led by Tetsuro Higashi, former chairman of Tokyo Electron, also estimated that Japan would have to spend one trillion yen in the current fiscal year, and more in the coming years, to prevent the county’s chip industry from falling further behind.