[Chip Talk] 42 Trillion Semiconductor Investment Concentrated in 'Silicon Island'

Miso of Kyushu, Japan
100 Semiconductor Investments in Last 3 Years
60% of Investment for TSMC Kumamoto Factory
Japanese Companies Like Sony, Mitsubishi, and Sumco Also Invest

Japan's 'Silicon Island' Kyushu is smiling once again. This is because it has attracted semiconductor investments worth 42 trillion won over the past three years, including from Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) company, as well as domestic companies. Japan's ambition to revive the semiconductor industry is revitalizing the Kyushu economy.

According to Nihon Keizai Shimbun, the Kyushu Bureau of Economy, Trade and Industry has recorded 100 semiconductor-related facility investments in Kyushu from April 2021 to June 2024. The officially announced investment amount alone reaches 4.74 trillion yen (approximately 42.2 trillion won).

The view of Kumamoto Prefecture in Kyushu, Japan, where TSMC's Kumamoto factory is located [Image source=AFP Yonhap News]

The Kyushu region was once the hub of Japan's semiconductor industry. In the 1980s, when Japan led the global semiconductor market, production factories gathered there, earning it the nickname 'Silicon Island.' Today, Kyushu accounts for about 50% of Japan's semiconductor production, but at one time, it produced 10% of the world's semiconductors, reflecting its global stature. Of course, this was before semiconductor dominance shifted from Japan to the United States, South Korea, Taiwan, and others.

Kyushu began to revive starting with TSMC's investment in Japan in 2021. This is why Kumamoto Prefecture, within Kyushu, has seen the most semiconductor investments. TSMC's investment in Kumamoto accounts for 60% of the total investment amount in Kyushu. TSMC is investing $20 billion (approximately 27.7 trillion won) to build two factories in Kumamoto. The Japanese government has also decided to subsidize these two factories with 1.2 trillion yen.

With TSMC establishing itself in this area, Taiwanese companies that have existing business with TSMC are also creating local subsidiaries in Kyushu or collaborating with local small and medium-sized enterprises to expand their presence. Representative Taiwanese companies currently supplying products to TSMC's Kumamoto factories include Hames Happytech, Gadung Precision, and North Engineering.

Japanese companies are also pouring investments into Kumamoto. Sony Group began constructing a new factory building in Koshi City, Kumamoto Prefecture, last April. The site area has been expanded from the initially planned 270,000 square meters to 370,000 square meters for the construction. Sony also expanded its image sensor factory in Nagasaki Prefecture by the end of last year but decided to take this measure to prepare for additional demand. Mitsubishi Electric plans to invest 100 billion yen in its Kumamoto base and start operations in November next year.

Beyond Kumamoto, semiconductor investments continue throughout Kyushu. Japan's power semiconductor company ROHM is investing 300 billion yen to build a new factory in Miyazaki Prefecture, aiming to start operations by the end of this year. Japan's Semco, the world's second-largest wafer company, is investing 400 billion yen across Kyushu. Existing factories in Saga and Nagasaki Prefectures will expand production capacity, and a new factory targeting product supply by 2029 will be added in Saga Prefecture.

A male employee is walking in front of the signboard of JASM, a subsidiary established by TSMC to operate the Kumamoto factory.
[Photo by AFP Yonhap News]

Nihon Keizai Shimbun analyzed, "Not only semiconductor companies but also logistics facility investments are active," and added, "(Since the factories planned by TSMC will handle front-end processes,) if companies responsible for back-end processes are attracted to the region, Kyushu's semiconductor supply chain will expand further." It also left open the possibility of additional investments by Taiwanese companies in Kyushu in the future.

As semiconductor investments concentrate in the Kyushu region like this, there is also a forecast that an economic effect of 180 trillion yen related to semiconductors will occur over the next 10 years. In February, the Kyushu Economic Research Association predicted that the economic effect of semiconductor facility investments in Kyushu over 10 years from 2021 would be 2.077 trillion yen, with Kumamoto Prefecture expected to see an economic effect of 1.0536 trillion yen.

This content was produced with the assistance of AI translation services.