Last December, the primary chipmaker of Apple, Taiwan Semiconductor Manufacturing Co. (TSMC), reported Q4 sales amounting to $4.2 billion. While this was due to many factors, a large part of the revenue was generated in Japan. True enough, an impressive 4000% increase in the shipments of iPhone models (specifically the 5G-supported ones) was due to the demand in the Japanese market.
As a result, the chip manufacturing company has expressed its interest to include the country in their operations. The company has recently announced that they will expand their “global manufacturing footprint” by building a chip production plant in Kumamoto, Japan.
TSMC in Japan
The project will start with the construction of research facilities at the National Institute of Advanced Industrial Science and Technology in Tsukuba, near Tokyo. Reuter’s report on Japanese manufacturing updates notes that aside from the government’s pledge to pay half of the $337 million needed for the facility, TSMC will also spend about $178 million for the cause. The project is expected to fully kick off in 2022.
However, TSMC company chairman Liu emphasized that they are still in the “due diligence” phase.
“It is still early to disclose the decision, because it will be based on our customer needs, operating efficiency evaluation and cost economics,” added Mark Liu, TSMC’s Chairman. “The potential fab in Japan is [also] not included in TSMC’s three-year, $100 billion capital expenditure plan.”
Chip shortage
This development came immediately after TSMC’s announcement that they will be working with 20+ Japanese tech companies, including electronic component maker Ibiden Co., chemical firm Asahi Kasei, and Sumitomo Chemical to develop cutting-edge chip manufacturing technology in the country. It is a very timely move for them as well, since Gartner analysts have reported that industries will still be in the midst of global semiconductor shortage until the 2nd quarter of 2022.
Plus, it is an opportunity for these group of companies to slowly make up for lost revenues last year.
Manufacturing in Japan
Even before the unexpected sales boom in the Japanese market, however, the decision of TSMC to expand into the country came as a surprise to no one. After all, Japan has always been one of the global leaders in the machinery and automotive manufacturing industries — something that Expat Bets’ guide to Japan points out has been its strength since feudal times. Manufacturing has powered its economy throughout the years, bolstered by strong buyer-supplier relationships and generous funding in science and research.
In fact, manufactured products from Japan have a reputation for their quality, durability, and sophistication. In today’s age of fierce market competition, the manufacturing industry of Japan remains steadfast, as it has implemented a strategy different from other global manufacturers. Instead of expanding their businesses to cover the entire industrial chain, local manufacturers focus on the production of high-quality components, making them indispensable to both the local and international market.
TSMC’s decision to build a chip factory in Japan implies that they, too, will adopt similar practices — and this will only help them expand their business in the long-term.
In fact, the company plans to expand their services not just in mobile manufacturing but in infrastructure and automobile, too. They’re building a $12 billion facility in Arizona because of this.