[News] Japanese Lawmaker Confirms Additional ¥900 Billion Subsidies for TSMC’s Kumamoto 2nd Fab

According to a report by Bloomberg, Yoshihiro Seki, Secretary-General of the ruling Liberal Democratic Party and a member of the Japanese parliament, has announced that the government is planning to allocate an additional ¥900 billion for the construction of TSMC’s Fab 2 in Kumamoto, Japan. Furthermore, an extra ¥590 billion in subsidies will be provided to support the construction of a wafer fab by the Japanese semiconductor startup Rapidus.

Seki emphasized that subsidies usually cover about one-third of the total investment. With measures like training Japanese engineers and collaborative R&D with local companies, this subsidy could increase to potentially cover up to half of the investment. He also noted that the specific amount remains subject to change as the additional budget has not been finalized yet.

The Japanese government initiated the “Strategy for Semiconductors and the Digital Industry” in 2021 to address economic risks and prepare for the wave of digitalization. At that time, they already provided ¥476 billion in subsidies for TSMC’s Kumamoto 1st Fab. The current subsidy marks an expansion of these efforts.

The local government Kumamoto is eagerly anticipating TSMC’s presence. Ikuo Kabashima, the Governor of Kumamoto Prefecture, recently proposed “New Airport Concept Next Stage” that envisions using the airport as a hub for semiconductor imports and exports over the next decade. This plan aims to stimulate the clustering of semiconductor-related industries and contribute to regional development centered around Kumamoto.

Moreover, the Japanese government has pledged to provide ¥330 billion in funding to enable Rapidus to construct a 2nm wafer fab in Hokkaido. These substantial subsidies underscore the Japanese government’s commitment to these semiconductor projects.

In response to the Japanese government’s additional subsidies, Tetsuro Higashi, Chairman of Rapidus, stated in an interview with Jiji Press on the 24th that apart from the new factory being built in Chitose, Hokkaido, “We also plan to construct second and third factories, and they will also be situated in Chitose, Hokkaido.” Rapidus’s 2nm chip R&D/production facility, Chitose Fab IIM-1, located in the Chitose Meimeimei World industrial park in Chitose, Hokkaido, commenced construction in September. The trial production line is expected to start in April 2025, with mass production slated to begin in 2027.


[News] Japan to Collaborate with EU and US to Set EV and Semiconductor Subsidy Standards

In response to China’s booming EV industry and growing influence in the global market, reports emerged on the 24th indicating that Japan is preparing to collaborate with both Europe and the United States to establish subsidy standards in areas such as electric vehicles and semiconductors. This collaboration comes after the European Union initiated an anti-subsidy investigation into Chinese EVs in September. Discussions on these standards could take place as early as this year.

Accroding to Taiwan’s Commercial Times, this trilateral initiative aims to secure a stable supply of critical materials and promote green transformation investments. Japan is planning to invest ¥20 trillion (approximately $134 billion) in green transformation over the next decade.

Across various industries, such as steel, solar energy, and panels, China has consistently supported its development through a “whole-nation system,” relying on subsidies that have made foreign competitors apprehensive. Many foreign companies have suffered setbacks and, in some cases, even exited these markets as a result.

The electric vehicle industry, in particular, has received substantial official subsidies in China. Through technology transfers and overseas acquisitions, China has succeeded in building the complete supply chain from upstream to downstream, making it a winner in the global automotive industry transformation.

According to data from the Ministry of Industry and Information Technology, since designating electric vehicles as a crucial strategic industry in the green energy transition, China’s central government has provided subsidies totaling at least over 200 billion Chinese Yuan from 2010 to 2022. The subsidies for electric vehicles have significantly increased since the announcement of “Made in China 2025” in 2015.

Nikkei Asia reported on the 24th that Japan is pursuing this joint effort with the US and the EU to break free from its reliance on critical Chinese components and counter China’s formidable influence. The collaboration will involve discussions on subsidy standards and government procurement requirements for industries like EVs and semiconductors. It will be facilitated through diplomatic and economic dialogues between high-ranking officials from Japan and the United States and the “Economic 2+2” meetings and high-level economic dialogues between Japan and the European Union.

Japan’s Minister of Economy, Trade, and Industry, Yasutoshi Nishimura, stated that this new working group will explore industry subsidies, government procurement eligibility criteria, and cooperation with like-minded countries to establish supply chain and procurement frameworks.

In addition to the EU’s anti-subsidy investigation into Chinese EVs, the United States has also mandated that 50% of electric vehicle battery components must be produced in North America to qualify for tax incentives, a move aimed at bolstering domestic manufacturing and supply chain resilience.

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(Image credit: Pixabay)


[News] Kioxia and Western Digital Merger in Turmoil? Reports of SK Hynix Disapproval and a Possible SoftBank Collaboration

Is the merger between NAND flash memory chipmakers Kioxia and Western Digital (WD) , which was expected to be finalized this month, facing a twist? According to media reports, South Korean memory giant SK Hynix is opposing this merger and is considering a collaboration with Japan’s SoftBank to invest in Kioxia.

As reported by Yomiuri Shimbun on the 18th, insiders reveal that the merger negotiations between Kioxia and WD might be at an impasse. Although both sides aimed to reach a merger agreement this month, SK Hynix, which plans to indirectly invest in Kioxia, doesn’t concur with the merger. In anticipation of negotiations collapsing, SK Hynix considers partnering with SoftBank to invest in Kioxia.

Kioxia, a spin-off from Toshiba’s memory business, was sold in 2018 to a Bain-Capital-lead consortium, including SK Hynix, and Hoya. At that time, regulations stipulated that the largest shareholder, Bain, must secure the consent of contributors like SK Hynix to promote this merger. It’s reported that SK Hynix is apprehensive that WD’s dominance will increase in this merger.

Reports suggest that SoftBank is currently bolstering its AI-related ventures. Therefore, by investing and enhancing relationships, SoftBank may secure a stable memory supply from Kioxia and SK Hynix.

Throne Shift for memory business? Mergers May Reshape Rankings

Nikkei reported on the 17th that SK Hynix does not approve of the Kioxia and WD merger. At this stage, SoftBank is not directly involved in the merger talks between Kioxia and WD. Kioxia and WD aim to secure a financing agreement with financial institutions this week to facilitate the merger. However, the lack of consent from SK Hynix may impact negotiations with financial institutions.

The report points out that in the NAND flash market, SK Hynix is the world’s second-largest manufacturer, trailing only Samsung. If Kioxia, the world’s third-largest manufacturer, and WD, the fourth-largest, were to merge, they would nearly match Samsung’s scale. This would create a significant gap between SK Hynix, which holds the third position, and raise concerns for SK Hynix.

Toshiba, currently holding approximately 40% of Kioxia, will also become a shareholder in the holding company, with Kioxia’s President, Nobuo Hayasaka, assuming the role of President for the holding company. Additionally, Kioxia will have the majority of seats on the board, granting substantial operational authority

According to data from TrendForce, In Q2 2023, Samsung leads the NAND memory market with 31.1% market share, while Kioxia holds 19.6%, and Western Digital has 14.7%. After the Kioxia-WD merger, their combined market share could exceed 34.3%, establishing them as the dominant force in the NAND memory market.

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(Image: SK Hynix )


[News] PSMC’s Japanese Venture in Mie Prefecture Awaits Local Support

According to UDN News, Taiwan’s semiconductor foundry, Powerchip Semiconductor Manufacturing Corporation (PSMC), is planning to establish a 12-inch wafer plant in Japan, with Mie Prefecture emerging as a probable location. This facility will be part of a burgeoning semiconductor hub that links up with the thriving industrial city of Nagoya and UMC’s Japanese plant, pending the approval of Japanese government subsidies. PSMC would be the second Taiwanese semiconductor giant to set up shop in Japan after this move, expanding its global presence.

PSMC has yet to officially comment on its investment in Japan or the specific site for the plant. Market observers note that PSMC’s Chairman, Frank Huang, has a track record of close collaboration with Japanese firms. From early partnerships with Elpida in producing DRAM to later contract manufacturing of ICs for Renesas, PSMC’s order books are expected to be promising in Japan.

In July of this year, PSMC announced a partnership with the Japanese financial group SBI Holdings to establish a 12-inch wafer foundry within Japan and seek official Japanese subsidies.

PSMC envisions that the Japanese foundry will utilize 22/28-nanometer manufacturing processes and incorporate advanced Wafer on Wafer stacking technology to meet the demands of the AI market. Recent reports suggest that the Japanese government has granted substantial subsidies, around 140 billion yen, for the PSMC-SBI collaboration in Japan, although PSMC refrains from commenting on this matter.

Recent reports indicate that the location of PSMC’s new facility in collaboration with SBI is likely to be in Mie Prefecture. This choice is supported by two key factors. Firstly, it’s in close proximity to the bustling industrial hub of Nagoya, offering logistical advantages for both raw materials and wafer exports. Additionally, UMC acquired Fujitsu’s 12-inch wafer plant in Kuwana City, Mie Prefecture, showcasing regional wafer expertise. This choice benefits from the industrial cluster, streamlining recruitment and material logistics for construction and production.

It is understood that PSMC’s collaboration with SBI to establish a plant in Japan will follow a similar joint-venture mode like Nexchip Semiconductor Corporation in China several years ago. PSMC will provide its expertise in constructing the plants and managing the production lines. Once everything is up and running smoothly, they will gradually reduce their involvement and may adopt a shareholding model for the Japanese wafer plant.

(Image: PSMC)


[News] TSMC’s 2nd Plant in Japan May Receive Up to 900 Billion JPY Subsidy

TSMC is in the process of constructing a semiconductor factory in Kikuyo-cho, Kumamoto Prefecture, Kyushu, Japan (referred to as Plant 1). Production is expected to commence in December 2024. Besides this facility, TSMC has shown interest in establishing a second plant in Japan (referred to as Plant 2). According to Japanese reports, the government is considering providing TSMC with a substantial subsidy of up to 900 billion Japanese Yen for Plant 2.

On October 4, during the Public-Private Partnership Forum on Increasing Domestic Investment led by Japanese Prime Minister Fumio Kishida, plans were announced for economic measures to be finalized within October. The Ministry of Economy, Trade, and Industry of Japan (METI) will request a budget of 3.4 trillion Japanese Yen to establish three funds supporting semiconductor production and research and development. These funds are the ” Research and Development Project of the Enhanced Infrastructures for Post-5G Information and Communication Systems,” the “Specified Semiconductor Funding Program,” and the “Ensuring Stable Supply Support Fund.”

As reported by Asahi Shimbun, sources suggest that the METI deems it necessary to grant 900 billion Japanese Yen in subsidies for TSMC’s proposed Plant 2, nearly 600 billion Japanese Yen for the “Rapidus” national team aiming to produce next-gen semiconductor chips domestically, and 700 billion Japanese Yen for traditional chips like Sony CMOS image sensors.

The Japanese government will allocate the required funds for these economic measures in the 2023 fiscal year supplementary budget. If the METI’s budget request is approved, the budget for semiconductor-elated activities in the 2023 fiscal year supplementary budget (3.4 trillion Japanese Yen) will be 2.6 times higher than that in the 2022 fiscal year supplementary budget (1.3 trillion Japanese Yen).

The Kishida administration also announced plans to ease land restrictions for crucial manufacturing facilities such as semiconductor plants during the forum. As early as December, local governments will be able to issue development permits for agricultural land, forests, and other areas.

Before that, local governments could only grant permits for industries related to food logistics, data centers, and plant facilities. Now, this is being expanded to include vital strategic materials. Furthermore, changing the land category from agricultural land often required approvals from multiple government departments, a process that could take more than a year. In the future, these procedures are expected to be shortened to around four months.

(Image: Briáxis F. Mendes (孟必思), CC BY-SA 4.0, via Wikimedia Commons)

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