Japan needs chip suppliers who over the past decades shifted production overseas to start investing more at home as the country attempts to re-enter the global chip race.

That is the message from the company operating Taiwan Semiconductor Manufacturing Co.'s first chip plant in Japan.

Yuichi Horita, president of Japan Advanced Semiconductor Manufacturing (JASM), said he understood that many Japanese suppliers had shifted to Taiwan to serve major customers like TSMC, but they are now needed at home.

"Japanese companies are making high-quality materials in Taiwan. ... We would like them to help us, and move forward in making products in Japan," Horita said Thursday at the Semicon Japan trade show in Tokyo.

JASM was formed as a joint venture between TSMC, Sony Group and Toyota Motor-affiliated Denso to operate the chip plant, which is being built in Japan's southwestern Kumamoto prefecture.

Horita said construction is making "steady progress" and that the plant is on track to start production by 2024.

His company is looking to expand its domestic sourcing of materials and machine components. According to Horita, JASM aims to increase the share of indirect materials, such as tools, that it sources from Japan to 60% in 2030, up from the current 25%.

Horita said many Japanese companies are making materials used for producing cutting-edge semiconductors in Taiwan rather than Japan because "progress for [chip] miniaturization has somewhat halted in Japan."

Japan Inc. largely dropped out of the race to produce advanced chips decades ago, with its domestic capabilities today estimated to be around the 40-nanometer level. Global leaders like TSMC and Intel of the U.S. are racing to produce chips at the 2-nm level or below.

In chip terms, nanometer refers to the distance between transistors, which control the flow of electric current. The smaller the number, the more transistors can be placed in the same area, resulting in more efficient and powerful chips.

The Japanese government in recent years has made reviving the chip industry a major policy goal, with the equivalent of billions of dollars earmarked for support.

For TSMC, having suppliers closer to its Kumamoto plant would make acquiring materials quicker and cheaper.

"One of the big propositions of this project is to move technology from the Taiwan sister factory [to Kumamoto] in a very short period," Horita said. "Therefore, we must use materials of the same performance and quality [as in Taiwan]."

Having domestic suppliers would also provide a buffer against potential supply chain disruptions, such as what might result from a conflict in East Asia or further geopolitical tension between the U.S. and China.

Bringing back companies that already serve TSMC has another potential benefit: The Taiwanese chipmaker is normally reluctant to switch suppliers, according to Japanese companies in the industry, as the smallest change in the condition of its factories or the quality of inputs could affect the productivity of its chip production lines.

By: DocMemory
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