Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest semiconductor foundry, is set to open a second factory in Japan this year, following investments totaling $20 billion into the new plants in Japan by the private sector. The new Japan Advanced Semiconductor Manufacturing (JASM) in Kumamoto, southwestern Japan, is expected to begin operations before the end of the year, with a focus on producing automotive, industrial, and consumer-use chips.

The decision to expand into Japan comes amidst escalating tensions between the United States and China over chip manufacturing and imports. TSMC's move is significant given its Taiwanese origins and Beijing's claims over the self-ruling island. The company's chairman, Mark Liu, expressed gratitude for the support provided by Japan, an ally of the U.S., during the factory's opening ceremony, which was also attended by TSMC founder Morris Chang.

Notably, Paul You, chairman of First Securities Investment Corporation, recently warned that the global semiconductor industry could face challenges due to the heightened U.S.-China tensions, specifically in the realm of chip manufacturing. The U.S. has been tightening controls on shipments of advanced AI chips and semiconductor tools to China, including restrictions on companies like Nvidia, as part of efforts to curb China's advancements in AI and military technologies.

With Japan aiming to revitalize its semiconductor industry to compete in the Asia Pacific region, a report from the Center for Strategic and International Studies highlights that Japan's semiconductor sector lags behind industry leaders like TSMC by approximately a decade. In the late 1980s, Japan accounted for over half of global semiconductor production, but its share had decreased to 9% by 2022.

TSMC's entrance into the Japanese market reflects the shifting landscape of the semiconductor industry amid geopolitical tensions and intensifying competition in the technology sector.