Key facts
- TSMC's presence in Kyushu has led to a surge in investment from financial groups and firms.
- The "Silicon Island" of Kyushu is experiencing a semiconductor industry buildup.
- The economic ripple effect of TSMC's entry is projected to be 11 trillion yen over a decade.
- Investments related to Kyushu's chip sector have exceeded 5 trillion yen ($32.7 billion).
- Several Japanese companies are supplying parts, materials, and equipment to TSMC's Kumamoto plant.
The arrival of Taiwan Semiconductor Manufacturing Co. (TSMC) in Japan's southwestern island of Kyushu has catalyzed a significant expansion of the region's semiconductor industry, transforming it into a "Silicon Island." This development has attracted a substantial influx of investment from financial groups and firms from Taiwan and Japan, eager to support and capitalize on the burgeoning sector.
TSMC's first plant in Kumamoto, operated by Japan Advanced Semiconductor Manufacturing (JASM), commenced operations in December 2024, with a second facility slated to begin production in 2027. The Kumamoto Prefecture governor has indicated enthusiasm for attracting a third facility, signaling continued growth potential.
Estimates from the Kyushu Financial Group suggest that TSMC's presence will generate an economic ripple effect of approximately 11 trillion yen over the ten years starting from 2022. This scale is equivalent to about seven times the annual gross prefectural product of Kumamoto Prefecture. The decision for TSMC to establish a base in Japan was influenced by a combination of factors including economic security, supply chain diversification, Japan's technological capabilities, abundant groundwater, ground stability, and significant government subsidies.
A network of Japanese companies is set to benefit directly or indirectly from TSMC's operations. These include Tokyo Electron, a supplier of semiconductor manufacturing equipment; Disco, a global leader in wafer cutting and polishing; Shin-Etsu Chemical, the world's largest silicon wafer manufacturer and a major supplier of photoresists; Kanto Denka Kogyo, a producer of special gases; and Organo, a manufacturer of ultrapure water systems. Sony Group and Denso Corporation are also participating as investors in JASM, with Sony aiming to secure its own semiconductor manufacturing and stable supply, while Denso seeks to ensure a steady supply of semiconductors for electric and autonomous vehicles.
The economic impact extends beyond corporate performance, significantly influencing the regional economy. Land prices and rents for rental properties around the TSMC plant have seen a notable increase following the announcement of its establishment. Overall, investments related to Kyushu's chip sector have surpassed 5 trillion yen ($32.7 billion) ahead of the opening of TSMC's first plant.