Powerchip Semiconductor Manufacturing Corp (力積電) plans to build an ￥800 billion (US$5.3 billion) factory in northeast Japan with financing from investment group SBI Holdings Inc and the Japanese government, the latest boost to the nation’s bid to expand its chip manufacturing base.
The factory would require an initial investment of ￥420 billion, of which Powerchip and SBI would pay more than half, the firms said.
The rest would come from investors, bank loans and government subsidies, they said.
Photo: Reuters
The foundry, to be built in Miyagi Prefecture, is to produce mature 40-nanometer and 55-nanometer semiconductors, focusing on automotive chips and power controllers, and is to go online in 2027, the companies said.
Japan, home to Toyota Motor Corp and Honda Motor Co, is a heavy user of such chips, produced by the likes of Tokyo-based Renesas Electronics Corp.
“We’ve made preparations to create an unbeatable foundry and build a semiconductor ecosystem,” SBI chief executive officer Yoshitaka Kitao told a news conference yesterday.
SBI is to pay about ￥100 billion of the initial investment and seek another ￥100 billion through a new fund it plans to set up, but will not build a foundry without subsidies, Kitao said.
Japanese Prime Minister Fumio Kishida’s administration is paying billions of dollars in subsidies to chipmakers moving production to Japan.
Spurred by the financial support, Powerchip’s bigger rival and industry leader Taiwan Semiconductor Manufacturing Co (台積電) is building a factory in southern Japan, with operations expected to begin next year.
US memorychip maker Micron Technology Inc, and domestic players Kioxia Holdings Corp and Rapidus Corp are also expanding production in the world’s third-largest economy, helped by government support.
“The automotive chips that Powerchip will focus on are precisely the kind of chips used in vehicles today and will help secure this production base,” Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura said at a regular news conference ahead of the investment announcement.
“We want to secure the supplementary budget necessary to strengthen our semiconductor supply chain,” Nishimura added.
Japan, which wants to claw back its former leadership in chips, is benefiting from a shift in global supply chains as manufacturers seek to lower reliance on Taiwan and hedge against rising US-China tensions.
Washington is also offering incentives to chipmakers building capacity in the US, but progress has been slow.
Japan is “the best place” for semiconductor investment, Powerchip chairman Frank Huang (黃崇仁) said.
With so much capacity coming online in Japan, it remains unclear how companies would be able to secure enough engineering talent, given a weak yen.
Powerchip’s move comes as the chip sector fights to regain its footing from a sharp drop in demand following the COVID-19 pandemic.
The Taiwanese contract chipmaker had a tough first half, with little profit due to weak sales.
It reportedly told investors in July that it would be conservative with capacity expansion going forward.
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