TSMC Sets Up Plants in Japan, China with $62.5B Subsidies

TSMC is significantly expanding its global presence, bolstered by substantial support from governments in Japan and China. In the first half of this year alone, TSMC secured nearly NT$8 billion in subsidies from these nations. To date, the company has accumulated a total of NT$62.5 billion in government support from Japan and China.

According to TSMC's financial reports, its subsidiaries in Japan (JASM) and Nanjing have been awarded these substantial subsidies to support their plans for new manufacturing facilities in Kumamoto and Nanjing. The funding is primarily aimed at covering costs related to real estate, factory construction, and equipment purchases, as well as some operational expenses.

In 2022, TSMC received approximately NT$7.05 billion in government subsidies from Japan and China. This amount increased to NT$47.55 billion in 2023, with an additional NT$7.96 billion received in the first half of this year, bringing the cumulative total to NT$62.55 billion.

Globally, semiconductors are increasingly recognized as strategic assets, with governments offering significant incentives to advance the semiconductor industry. TSMC, with its leading-edge technology, has become a key target for such investments. The company is already establishing new facilities in Kumamoto, Japan, and Arizona, USA, while also expanding its 28-nanometer production capacity in China.

On August 20, TSMC held a groundbreaking ceremony for its European Semiconductor Manufacturing Company (ESMC) in Dresden, Germany. This marks the beginning of the land preparation phase for a new semiconductor wafer factory, further extending TSMC’s global operations into Europe.

The ceremony was presided over by TSMC Chairman Mark Liu, with German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen in attendance. During the event, it was announced that the European Commission had approved a €5 billion subsidy under EU state aid rules, demonstrating strong support for the ESMC initiative.

The Kumamoto plant in Japan is advancing rapidly, with the first wafer factory set to start mass production of 12nm, 16nm, 22nm, and 28nm process technologies in the fourth quarter of this year. The second factory is anticipated to begin production in 2027, focusing on 6nm, 7nm, 12nm, 16nm, and 40nm process technologies.

In Arizona, USA, TSMC's first wafer plant is scheduled to commence production of 4nm process technology in the first half of 2025. A second plant is expected to start producing 2nm process technology by 2028, and a third factory will be built to adopt 2nm or more advanced technologies.

In April, the U.S. Department of Commerce announced a $6.6 billion subsidy to support TSMC's Arizona facility. While TSMC has not yet received this funding, the company has not provided forecasts on future government subsidies.

As TSMC continues to expand its global footprint, there is notable interest in how rising costs will be managed. The company plans to address these challenges through strategic pricing, securing ongoing government support, and leveraging its advanced manufacturing technology and large-scale production capabilities. TSMC remains confident in achieving a long-term gross profit margin of over 53%.