Taiwan chipmaker Powerchip Semiconductor Manufacturing Corp (6770.TW) is considering around five sites in Japan, including Mie prefecture, for setting up a potential $5.4 billion factory as talks on subsidies progress, sources said.

Powerchip announced in July it was setting up a joint venture with Japanese financial firm SBI Holdings (8473.T) with the aim of securing government subsidies to build a plant in Japan.

Those talks are progressing, according to two sources, who declined to be named as the information is not public.

The total cost of the factory is expected to be around 800 billion yen ($5.35 billion), one source said, with Powerchip negotiating for subsidies to cover part of the cost of the first phase.

Powerchip is looking at around five sites for the factory, the source said. One option is Mie prefecture in central Japan, two sources said, close to the industrial hub of Nagoya and fabs operated by Taiwan's UMC (2303.TW) and Japan's Kioxia.

Powerchip did not respond to requests for comment.

An SBI spokesperson said negotiations with the Japanese government are ongoing and there is a plan to formally apply for subsidies for the 420 billion yen first phase.

Japan is seeking to rejuvenate its chip industry, which retains an edge in materials and equipment but has lost its dominance in manufacturing, with subsidies for domestic and foreign chipmakers.

A factory from Powerchip would mark a further commitment by Taiwanese chipmakers into manufacturing in Japan, with TSMC (2330.TW) building a factory in Kyushu in western Japan and eyeing a second.

TSMC, the world's leading contract chipmaker, has become increasingly positive about Japan as a base for production, seeing its workforce as industrious, and government as easy to deal with, Reuters reported previously.

Powerchip sees scope for additional foundry capacity in Japan, which has witnessed a lack of investment in recent years, and aims to list the joint venture in five to seven years, Reuters reported previously.

($1 = 149.5400 yen) _

By: DocMemory
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