TSMC plans to begin mass production of advanced 3-nanometre chips in Kumamoto in southern Japan, Chief Executive C.C. Wei said on Thursday, marking a significant shift in the company’s manufacturing strategy as it responds to surging demand for AI-related semiconductors. Local media have reported that the investment tied to the project could amount to $17 billion.
The Taiwanese company, which is the world’s largest contract chipmaker and a major supplier of AI chips to firms such as Nvidia, currently manufactures its most advanced semiconductors in Taiwan. Until now, TSMC’s expansion plans in Japan had focused on older, less advanced process technologies.
Wei’s announcement positions Japan as the latest location for producing high-end 3-nanometre chips, which are widely used in high-performance computing systems and AI servers. TSMC has also said it plans to start producing 3-nanometre chips at its second fabrication facility in Arizona in 2027.
The rapid expansion of artificial intelligence has strengthened TSMC’s market position, helping Asia’s most valuable listed company pull ahead of competitors as demand for advanced chips continues to rise.
“We believe this fab will further contribute to the local economic growth and, most importantly, form a foundation for Japan’s AI business,” Wei said in Tokyo during a meeting with Japan’s Prime Minister Sanae Takaichi.
Wei added that TSMC is holding discussions with Japanese customers and partners about additional forms of cooperation across several areas critical to the AI supply chain.
Takaichi said that 3-nanometre chips are of major importance to Japan’s economic security, reflecting broader government concerns over securing stable access to advanced semiconductor technology.
In an email to Reuters, TSMC said it is now planning to deploy 3-nanometre process technology at its second fabrication plant in Japan in response to strong AI-driven demand. The company declined to comment on the $17 billion investment figure reported earlier by the Yomiuri newspaper.
Japan’s government, which has already provided subsidies to support TSMC’s expansion in Kyushu, is considering additional financial backing for the revised investment plan, according to Yomiuri. TSMC had previously announced plans to invest $12.2 billion to produce 6- to 12-nanometre chips at its second Kyushu facility but is now expected to discuss changes to that plan with Japanese authorities.
On an earnings call in January, TSMC said construction of its second fabrication plant in Japan had already begun and noted that “the technologies and ramp schedule will be based on our customers’ need and market conditions.”
Japan is also supporting domestic chipmaking efforts, including heavy subsidies for Rapidus, a local foundry venture planning to manufacture advanced chips on the northern island of Hokkaido. The government has concluded that the products from Rapidus and TSMC will serve different purposes and will not compete directly, Yomiuri reported.
As semiconductors play an increasingly critical role in electronics, automotive manufacturing, and defence systems, governments worldwide have intensified efforts to secure reliable access to advanced chip production.
