Taiwan Semiconductor Manufacturing Co (NYSE:TSM) is stepping up its efforts to diversify chip production beyond Taiwan, with plans to begin constructing a second factory in Japan later this year.
The key Nvidia Corp (NASDAQ:NVDA) supplier’s new facility in Kumamoto prefecture is expected to be operational by the end of 2027 and will manufacture 6-nanometer chips, marking the most advanced semiconductors produced in Japan.
Alongside the first Kumamoto plant currently under construction, these two factories will boast a combined capacity of at least 100,000 12-inch wafers a month, aligning with the capacity of TSMC’s gigafabs in Taiwan, Nikkei Asia reports.
In a strategic move to diversify production and mitigate risk, TSMC is expanding in Japan and establishing facilities in Arizona, USA, for 4-nanometer chips and in Germany for 12- to 28-nanometer chips.
This global expansion aims to increase TSMC’s production capacity outside Taiwan to 300,000 wafers a month by 2028, accounting for over 20% of its current total capacity.
Despite the global push, TSMC remains committed to keeping the production of its most advanced chips in Taiwan, with plans to scale up production of next-generation 2-nanometer chips in Hsinchu next year. Additionally, a facility initially intended for legacy chips in Kaohsiung is being repurposed for 2-nanometer fabrication, reflecting TSMC’s agile response to the booming demand for generative artificial intelligence technologies.
Japan is investing up to ¥45 billion ($300 million) to support the Leading-edge Semiconductor Technology Center (LSTC) in developing advanced chip technologies, Bloomberg reports.
The Ministry of Economy, Trade, and Industry (METI) has sanctioned outsourcing research on state-of-the-art fabrication technologies to LSTC, a collective of Japanese researchers specializing in nanotechnology, materials, and artificial intelligence.
TSMC gained over 38% last year courtesy of AI frenzy.
Price Action: TSM shares traded higher by 0.76% at $134.74 premarket on the last check Friday.
Also Read: Taiwan Semi Signals Sector Recovery with Strong January Sales: A Look Ahead for Tech Investors
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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