Taiwan Semi Spurs Semiconductor Investment Frenzy in Japan, Boosting Local Economy and Banking Sector

Taiwan Semiconductor Manufacturing Co TSM has catalyzed a surge in interest from Taiwanese and Southeast Asian investors looking to tap into Japan’s semiconductor market, particularly in Kumamoto, known for its semiconductor incentives. 

The trend also coincided with the U.S. imposing sanctions on China’s advancements in cutting-edge semiconductors.

Max Lin, executive vice president at CTBC Bank, Taiwan’s biggest private bank, noted the burgeoning demand for banking services in Kumamoto, driven by the key Nvidia Corp NVDA supplier’s announcement of its first-ever Japanese chip fabrication plant in the region. 

It marked a significant pivot for CTBC Bank, which expanded its operations to downtown Kumamoto to cater to the growing needs of clients involved in the semiconductor boom, from real estate inquiries to lifestyle advice, Nikkei Asia reports.

Recent reports indicated that TSMC is expanding in Japan with a second factory for 6-nm chips. The new facility in Kumamoto prefecture will likely be operational by the end of 2027.

The semiconductor industry’s expansion has turned Japan into an attractive destination for foreign banking expansions, a notable shift given the country’s previous challenges with negative interest rates deterring such moves. 

This change is underscored by the entry of seven other Taiwanese banks into Japan, following TSMC’s lead. 

TSMC’s Kumamoto plant, poised for mass production by year-end to supply giants like Sony Group Corp SONY and Denso Corp DNZOF DNZOY, represents TSMC’s broader strategy to diversify its manufacturing footprint outside Taiwan in response to geopolitical tensions and the global chip shortage, with ambitious plans for overseas expansion in the U.S., Japan, and Germany.

TSMC’s foray into Japan benefits from cultural affinities and a skilled workforce, easing the expansion process compared to other regions. 

Japan earmarked up to ¥45 billion ($300 million) to support the Leading-edge Semiconductor Technology Center (LSTC) in developing advanced chip technologies. The LSTC is a collective of Japanese researchers specializing in nanotechnology, materials, and AI.

Recently, Analog Devices, Inc ADI tapped TSMC’s majority-owned subsidiary, Japan Advanced Semiconductor Manufacturing, Inc (JASM), to secure long-term wafer capacity, including 40nm and finer process technology nodes.

TSMC stock gained over 27% year-to-date versus Nvidia at 63% as the AI frenzy is in no mood to fizzle out.

Price Action: TSM shares traded higher by 0.63% at $129.88 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo by Sundry Photography on Shutterstock