Global chip powerhouses TSMC and Micron have both announced record-breaking, multi-billion projects in Japan after Tokyo recognised semiconductors as a sensitive industry and pledged it wide support earlier this year. 

Amid a global chip shortage that has caused production bottlenecks across several industries, from automotive to communications and digital devices, Taiwanese TSMC, which produces chips on behalf of its clients under contract manufacturing schemes, announced a partnership with Japanese Sony in November to set up a $7bn fabrication plant (fab) in Kumamoto. The announcement came just a few weeks after local newspaper Nikkan Kogyo reported that US-based Micron is moving ahead with a new Y800bn ($7.8bn) fab in Hiroshima as part of its global strategy to ramp up its manufacturing and research and development operations in the next decade.


Micron’s and TSMC’s projects stand out as, respectively, the first- and second-largest foreign direct investment projects announced in Japan since record began in 2003, according to figures from foreign investment monitor fDi Markets.

Governments are increasingly recognising semiconductors as a sensitive industry and a key piece of their tech sovereignty agendas. As a result, they are introducing special strategies and incentives to lure producers into setting up production locally and developing more resilient domestic value chains to protect local producers. 

Japan is no exception. Yoshihide Suga, who succeeded Shinzo Abe as prime minister between September 2020 and September 2021 before resigning and being replaced by Fumio Kishida, put semiconductors at the heart of his government’s strategy for economic growth announced in June. That strategy introduced tax breaks and other incentives for new chip-related facilities, and pledged to support partnerships between Japanese companies and major chip makers in the US and Taiwan. 

TSMC itself mentioned the “strong support” by the Japanese government among the reasons for its decision to pull the trigger on the new $7bn facility in Kumamoto in partnership with Sony in November. Sony itself had good reasons to team up with TSMC as it has first-hand experience of the current market bottlenecks. The launch of its iconic PlayStation 5 console was marred by the global chip shortage, and consumers are still struggling to buy the console that was initially launched in November 2020. 

Other major economies are moving in the same direction. Just across the Japan Sea, South Korea has ambitions to become the global leader in the production of semiconductors by 2030, and Seoul’s government has pledged to mobilise as much as Won510tn won ($429.7bn) by 2030 for the purpose. The White House is also pledging deep support for the industry, and has already seen the likes of TSMC and Samsung Electronics announcing multi-billion fabs projects in Arizona and Texas, respectively, in the past two years, while the EU is working on a semiconductor policy expected to be approved in 2022.