Taiwan’s semiconductor giant TSMC is reportedly considering establishing advanced chip packaging capacity in Japan

Taiwan’s semiconductor behemoth, TSMC, is reportedly exploring the possibility of establishing advanced chip packaging capabilities in Japan, a move that could significantly boost Japan’s semiconductor sector.

Sources familiar with the matter, who spoke on condition of anonymity due to the sensitive nature of the discussions, revealed that talks are in the early stages.

One insider suggested that TSMC is contemplating bringing its chip-on-wafer-on-substrate (CoWoS) packaging technology to Japan. CoWoS is an intricate process known for stacking chips on top of each other, thereby enhancing processing capabilities, conserving space, and reducing power consumption.

At present, all of TSMC’s CoWoS production is based in Taiwan, with no final decisions yet regarding the potential scale or timeline of this investment.

The global demand for advanced semiconductor packaging has seen a significant uptick, particularly driven by the widespread adoption of artificial intelligence applications.

Consequently, major chip manufacturers such as TSMC, Samsung Electronics, and Intel are expanding their packaging capacity to meet this growing demand.

Earlier this year, TSMC’s Chief Executive, C.C. Wei, announced plans to double the company’s CoWoS output in 2024, with further expansions slated for 2025.

Should TSMC proceed with establishing advanced packaging capabilities in Japan, it would complement the company’s existing operations in the country. This includes recent facility constructions in Kyushu and collaborative ventures with prominent Japanese firms like Sony and Toyota, with total investments surpassing $20 billion.

TSMC’s strategic move into Japan aligns with the country’s ambitions to fortify its semiconductor industry. Japan boasts a robust ecosystem consisting of leading materials and equipment manufacturers, growing chip fabrication investments, and a strong customer base.

An official from Japan’s industry ministry expressed optimism about Japan’s readiness to accommodate advanced packaging initiatives, highlighting the supportive environment for such endeavors.

However, analysts caution that the scale of TSMC’s potential investment in Japan might be constrained, given the uncertain demand for CoWoS packaging within the country. The majority of TSMC’s current CoWoS clientele is located in the United States.