TSMC to Produce World's Most Advanced 3nm Chips in Japan, Bolstering Tokyo's Semiconductor Ambitions

TOKYO (AP) — In a strategic expansion that strengthens Japan's position in the global tech race, Taiwan Semiconductor Manufacturing Co. (TSMC) confirmed Thursday it will produce its most advanced 3-nanometer semiconductors at a forthcoming factory in Japan. The decision directly supports Tokyo's push to reclaim leadership in chip manufacturing and capitalizes on explosive demand for artificial intelligence hardware.

The world's dominant contract chipmaker, a key supplier to Nvidia and Apple, stated the 3nm chips will be fabricated at its second facility in Kumamoto Prefecture, currently under construction. These semiconductors are pivotal for next-generation AI applications, high-performance computing, and premium smartphones.

The announcement, made during a meeting in Tokyo between TSMC Chairman C.C. Wei and Japanese Prime Minister Sanae Takaichi, delivers a timely political boost for the ruling party ahead of Sunday's general election. Takaichi has staked political capital on reviving Japan's semiconductor industry through substantial subsidies and partnerships.

"This is profoundly significant for Japan's economic security," Prime Minister Takaichi said. "We are committed to seeing this project through as planned."

The Kumamoto site is poised to become a hub for chips powering AI, robotics, and autonomous vehicles—sectors designated as strategically vital by the Japanese government. TSMC's first Japanese plant in the same region, which began volume production in late 2024, focuses on less advanced nodes.

This Japanese expansion runs parallel to TSMC's massive investments in Arizona, forming a global manufacturing network designed to mitigate supply chain risks and cater to geographically diverse clients. In a statement, Wei praised Japan's "forward-looking semiconductor policy," suggesting it would benefit the broader industry ecosystem.

Tokyo's ambitions extend beyond attracting TSMC. The government is also bankrolling the domestic venture Rapidus, which aims to mass-produce advanced logic chips, indicating a comprehensive, two-pronged strategy to regain technological sovereignty.

The Prime Minister's Office underscored the strategic imperative in a social media post, stating, "Hosting the world's most advanced semiconductor factory holds immense importance for our economic security."

TSMC's bold move comes amid soaring capital expenditures driven by the AI boom. The company recently revealed plans to increase spending by up to 40% this year, with a projected budget of $52-$56 billion for 2026. While some analysts warn of a potential AI investment bubble, Wei expressed confidence last month that the underlying demand from customers is "real."

Industry Voices: A Mix of Optimism and Caution

Kenji Tanaka, Semiconductor Analyst, Tokyo: "This is a game-changer for Japan's industrial policy. Securing 3nm production isn't just about economics; it's about ensuring Japan remains relevant in the defining technology of the next decade. The clustering effect with Rapidus and suppliers could revitalize entire regions."

Dr. Lisa Chen, Tech Geopolitics Researcher, Singapore: "TSMC is expertly navigating great-power competition. Diversifying advanced production to Japan and the U.S. mitigates its concentration risk in Taiwan. For Japan, it's a calculated step away from over-reliance on any single geography, though true technological independence remains a longer journey."

Michael Rossi, Former Fab Manager, California: "Let's not get carried away. Yes, it's a political win for Takaichi, but building a fab is one thing; sustaining it profitably with a local skilled workforce is another. Japan's high costs and rigid labor market could still hamper long-term competitiveness. This feels as much about geopolitics as it is about sound business."

Aiko Sato, Consumer Tech Advocate, Kyoto: "Finally! This is the kind of decisive action we've needed for years. We watched our chip industry fade in the 90s while others surged ahead. This partnership with TSMC is a reclaiming of our destiny. It's not just chips; it's about national pride and securing our future in an AI-driven world."

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Chan reported from Hong Kong.