Taiwan Semiconductor's Japan Chip Factory Faces Delays, While US Expansion Takes Priority

Taiwan Semiconductor Manufacturing Co TSM CEO C.C. Wei blamed traffic jams for delays in expanding its base in southwest Japan, hampering the progress of its Tokyo signature chipmaking project.

Wei also reiterated their commitment to invest another $100 billion to ramp up manufacturing in Arizona over the next half-decade.

However, he also highlighted to President Donald Trump the difficulties in completing the monumental construction in five years due to the skilled labor crisis, Bloomberg reported on Tuesday.

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Taiwan Semiconductor’s plan to build a second factory in Japan’s Kumamoto Prefecture remains vulnerable to the sudden inrush of workers from the contract chipmaker’s first plant, which is taking a toll on the rural infrastructure.

Interestingly, the chipmaker’s prioritization of the U.S. expansion reduced the urgency of production in Japan.

Prior reports indicated President Trump’s tariff warning coaxed Taiwan Semiconductor to ramp up investment in the U.S. without incremental subsidies.

Japan’s connection to ancestral land has made it difficult to promptly improve infrastructure despite the availability of government subsidies to attract foreign factories.

Concerns also remain over the longer-term outlook for AI demand. Taiwan Semiconductor’s conviction over demand for chips critical to developing artificial intelligence helped reassure investors against the Trump administration’s tariff policies.

However, the company remains cautious about the outlook for the 2025 global economy and semiconductor industry.

Reportedly, Taiwan, Japan, and the U.S. are establishing closer trilateral cooperation in the semiconductor industry, forming a “semiconductor iron triangle.”

The Taiwanese contract chipmaker’s Arizona factory uses Japan-made manufacturing devices and materials.

Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura expects collaboration in advanced chips to help the countries develop 5G, self-driving vehicles, and generative artificial intelligence.

He also proposed closer Taipei-Tokyo exchanges in the energy sector.

Price Action: TSM stock is up 0.52% to $195.86 at last check on Tuesday.

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