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ECONOMY

Japan chip subsidy requires 10-year pledge from TSMC, others

MAYUMI HIROSAWA, Nikkei staff writer

 

TOKYO — Japan plans to require chipmakers to maintain production here for about 10 years to qualify for a new subsidy designed to encourage more players to set up shop in the country.

 

With semiconductors becoming more vital to a range of products, from smartphones and home appliances to cars, Japan and other countries are scrambling to shore up supply. The chips are also increasingly considered crucial to national security. 

 

Tokyo is offering support to advanced chipmakers for building new production hubs in the country, starting with a multibillion-dollar package covering roughly half the cost of Taiwan Semiconductor Manufacturing Co.’s first Japanese plant. TSMC is the world’s largest chip manufacturer.

 

Last month, Japan’s parliament passed legislation on the chip subsidies, slated to take effect as early as March, with a total of 600 billion yen ($5.2 billion) budgeted to support chipmakers.

 

The plan is to provide 400 billion yen for TSMC’s plant in Kumamoto Prefecture. The facility will be built in partnership with Sony Group, and is slated to start mass-production by the end of 2024. The remaining money will go to other projects under consideration.

 

The government this month will start seeking public comment on specific rules regarding the subsidy, like the 10-year commitment, which will be outlined in an ordinance from the Ministry of Economy, Trade and Industry.

Other proposed requirements include increasing output during shortages, safeguarding key technologies and continuing investments at the subsidized factories.

 

To receive the subsidy, chipmakers must submit plans for new factories for approval from METI. The funds must be returned if they deviate from those plans.

 

The Japanese government also sees the subsidy as a way to bolster employment in the country’s semiconductor industry, which in turn could help boost production. The TSMC-Sony plant is expected to employ about 1,500 people.

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