TSMC Expansion in Japan Gets Financial Lift with ¥2T Government Fund

Japan looks to earmark ¥2 trillion ($13.3 billion) in additional budget to boost its domestic semiconductors manufacturing position.

Of the total, about ¥760 billion will go into a fund to support the mass production of chips, which could help a second Taiwan Semiconductor Manufacturing Co (NYSE: TSM) factory in Kumamoto, southwestern Japan, Bloomberg cites familiar sources. 

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TSMC is crucial in manufacturing Nvidia Corp's (NASDAQ: NVDA) AI accelerator chips, indispensable for training extensive data models. 

Close to ¥640 billion could go to another fund to support research of cutting-edge chips. That fund could also cater to Japan's domestic chip venture Rapidus Corp. 

Japan earmarked around ¥570 billion for a separate fund to enhance the stable supply of chips to Japan. The country looks to triple the sales of domestically produced semiconductors to over ¥15 trillion by 2030, the report says.

The nation added semiconductors as a critical item for economic security. The devices will play a significant role in driving future growth via electric vehicles and AI and creating opportunities to upgrade weapons technology.

Japan has committed significant financial support for semiconductor manufacturing, including ¥476 billion for a new TSMC plant in Kumamoto, which will likely start operations in late 2024. 

Additionally, ¥330 billion has been allocated to Rapidus to produce cutting-edge 2-nanometer logic chips, with mass production targeted to begin by 2027 in Hokkaido.

Price Action: TSM shares traded higher by 0.43% at $92.81 premarket on the last check Wednesday.