TSMC looking to Build Advanced Packaging Unit in Japan

TSMC, Taiwan's semiconductor giant, is reportedly considering building advanced packaging capacity in Japan, according to two sources familiar with the matter. This move could significantly contribute to Japan's efforts to revitalize its semiconductor industry.

The discussions are in early stages, and no decisions have been made regarding the scale or timeline of a potential investment. One option being considered is bringing TSMC's chip on wafer on substrate (CoWoS) packaging technology to Japan. CoWoS is a high-precision technology that involves stacking chips on top of each other, enhancing processing power while saving space and reducing power consumption. Currently, all of TSMC's CoWoS capacity is in Taiwan.

TSMC declined to comment on these reports. However, the demand for advanced semiconductor packaging has been increasing globally, driven by the artificial intelligence boom, prompting chipmakers like TSMC, Samsung Electronics, and Intel to expand their capacity.

TSMC has been expanding its operations in Japan, recently building one plant and announcing another on the southern island of Kyushu. The company is partnering with Japanese firms like Sony and Toyota in these ventures, with a total investment expected to exceed US$20 billion. Additionally, TSMC established an advanced packaging research and development center in Ibaraki prefecture in 2021.

Japan is seen as having the potential to play a significant role in advanced packaging, given its leading semiconductor materials and equipment makers, growing investment in chip fabrication capacity, and solid customer base.

However, analysts suggest that if TSMC were to build advanced packaging capacity in Japan, it might be limited in scale initially. The demand for CoWoS packaging within Japan is uncertain, with most of TSMC's current CoWoS customers located in the United States.

TSMC's plans in Japan have been supported by generous subsidies from the Japanese government, which sees the semiconductor industry as vital to its economic security. Other chipmakers like Intel and Samsung are also exploring opportunities in Japan, indicating the country's growing importance in the global semiconductor landscape.