Nikkei: Japan's chip subsidies require a ten-year commitment from companies such as TSMC

According to Nikkei Asia, Japan plans to require chipmakers to maintain production in the country for about 10 years before they are eligible for a new subsidy designed to encourage more players to set up factories in the country.

Source: Nikkei Asia

As semiconductors become increasingly important for a range of products, from smartphones and home appliances to automobiles, Japan and other countries are scrambling to increase supply. These chips are also increasingly seen as vital to national security.

Tokyo is supporting advanced chipmakers in setting up new production centers in the country, starting with covering about half the cost and billions of dollars worth of TSMC's first plant in Japan. TSMC is the world's largest chip manufacturer.

Last month, Japan's parliament passed legislation on chip subsidies, which is scheduled to take effect as early as March, with a total budget of 600 billion yen ($5.2 billion) to support chipmakers.

The plan will provide 400 billion yen for TSMC's plant in Kumamoto Prefecture. The plant will be built in cooperation with Sony Group and mass production is scheduled to begin at the end of 2024. The remaining funds will be used for other projects under consideration.

The Japanese government will this month begin soliciting public comment on specific rules governing subsidies, such as a 10-year commitment.

Other requirements included increasing production during periods of shortage, protecting critical technologies and continued investment in subsidized plants.

To receive subsidies, chipmakers must submit plans for new factories for approval by government authorities. If the funds deviate from these plans, they must be returned.

The Japanese government also sees subsidies as a way to boost employment in the country's semiconductor industry, which in turn could help boost production. The TSMC-Sony plant is expected to employ about 1,500 people. (Proofreading/Hidden Drei)