Taiwan's premier AI chipmaker TSMC is heading to Japan

Taiwan and Japan partnership strengths future and global semiconductor supply resilience.

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• Welcome to the first edition of Semiconductor Things™, where I seek to break down some of the news in the Semiconductor, AI chips and datacenter space globally to make it more accessible and easy to follow.

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• With the rise of Generative AI, Nvidia and TSMC and the geopolitical importance of Taiwan, this is now a major topic of me in my watching of the emerging tech space that I do as an analyst, writer, curators and news watcher.

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Taiwan produces over 60% of the world’s semiconductors and over 90% of the most advanced ones.

Taiwan's premier AI chipmaker TSMC is heading to Japan

This week what has really got my attention among many AI chip related topics is TSMC’s progress in Japan.

Japan said it will give TSMC up to 732 billion yen ($4.86 billion) more in subsidies to help it build a second chip fabrication plant as the Taiwanese company on Saturday marked the opening of its first Japanese factory in late February, 2024.

Taiwan Semiconductor Manufacturing Company Limited is a Taiwanese multinational semiconductor contract manufacturing and design company and is the most important company for high-end chips in the world.

TSMC is Most Important Global Company for High-End Chips

With a commanding 59% market share, TSMC's cutting-edge technology, including the N5, N7, and N3 nodes, has attracted industry giants like Apple, Qualcomm, and Nvidia. For the highest-end chips its monopoly on the market is far higher.

Taiwan is reportedly planning to strengthen its chip export ban against China by expanding the coverage of the banned items to photomasks and some high-end materials. Learn more. Earlier this year ASML halted its exports to China. TSMC and ASML are in my mind two of the key companies in the world regarding the global semiconductor supply-chains and for advanced chips.

Taiwan’s TSMC Crucial for the Global Economy of Chips

Taiwan Semiconductor Manufacturing Company, which counts Apple and Nvidia as clients, produces half the world's chips, used in everything from smartphones to satellites and increasingly to power AI technology.

In recent times, TSMC's customers, as well as governments concerned about supplies of chips vital to their economies and defense, want the firm to make more chips away from the self-ruled island of Taiwan (Formosa). TSMC opened its first chip fabrication plant in Japan on Saturday February 24th, 2024, as the semiconductor giant diversifies its supply chains away from Taiwan.

Japan Fab Smoother than U.S. Efforts towards Diversification

TSMC’s new facility in Phoenix, Arizona has run into a number of issues. TSMC seems to be having better cultural fit in Japan. The success in Japan stems from a combination of factors not easily repeated elsewhere: efficient government support, strict construction timetables and a low-cost workforce that flocked to the site and then labored 24 hours a day, seven days a week. Smoothing the entire effort was a deep partnership with local champion Sony Group Corp, an investor in and customer for the chip factory.