Japan's Semiconductor Push Aims to Bolster Nvidia's Key Supplier TSMC With $10B Subsidy

Japan looks to dole out an additional 1.49 trillion yen ($10 billion) in subsidies for two key semiconductor projects.

The country proposes to earmark up to 900 billion yen for a second Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM) factory in Kumamoto, southwestern Japan, while 590 billion yen for Japan’s homegrown chip venture Rapidus Corp, Bloomberg cites Yoshihiro Seki, secretary general of the Liberal Democratic Party’s lawmaker coalition on semiconductors. 

The 900 billion yen figure would imply the government will foot significantly more than a third of the new TSMC plant’s bill. The contract chipmaker is a primary supplier of Apple Inc (NASDAQ:AAPL) and Nvidia Corp (NASDAQ:NVDA).

The economy ministry has prioritized the subsidies part of its request for an upcoming extra budget in the current fiscal year.

Seki said the second TSMC factory will likely cost roughly 2 trillion yen and make 6-12 nanometer logic chips, devices catering to products like electric vehicles.

The government looks to press for additional incentives for Japan in exchange for the help that may include support like TSMC training Japanese engineers and conducting joint research with Japanese firms.

Japan is already shouldering roughly half of the cost of the first TSMC factory in Kumamoto, with up to 476 billion yen in subsidies. 

The government also committed 330 billion yen for Rapidus for making 2-nanometer logic chips in northern Hokkaido.

Previously, Taiwan, the home to TSMC, urged cooperation and support from its allies to beat the repercussions of the intensifying U.S.-China geopolitical tensions.

Price Action: TSM shares closed higher by 0.58% at $91.64 on Tuesday.