Exclusive-TSMC is considering advanced chip packaging capacity in Japan, sources say

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By journalsofus.com

By Sam Nussey, Fanny Potkin and Miho Uranaka

TOKYO (Reuters) – Taiwan’s TSMC is considering building advanced packaging capacity in Japan, according to two sources familiar with the matter, a move that would accelerate efforts to restart Japan’s semiconductor industry.

He said discussions are in the initial stages and he was not being identified as the information is not public.

According to a source with knowledge of the matter, one option the chip-making giant is considering is to bring its chip on wafer on substrate (CoWoS) packaging technology to Japan.

CoWoS is a high-precision technology that involves stacking chips on top of each other, saving space as well as increasing processing power and reducing power consumption.

Currently, all of TSMC’s CoWoS capacity is in Taiwan.

No decisions have been made on the scale or timeline of the potential investment, the source said.

TSMC, formally known as Taiwan Semiconductor Manufacturing Co., declined to comment.

Demand for advanced semiconductor packaging has increased globally along with the boom in artificial intelligence, prompting chipmakers including TSMC, Samsung Electronics and Intel to expand capacity.

TSMC Chief Executive CC Wei said in January that the company plans to double CoWos production this year and expects further increases in 2025.

On Monday, TSMC said without giving details that it was planning additional advanced packaging capacity in Chiayi, southern Taiwan, to respond to strong market demand.

Construction of a new Chiayi CoWoS plant is scheduled to begin in early May, the island’s official Central News Agency quoted Vice Premier Cheng Wen-tsan as saying.

Japan’s growing presence

Building capacity for advanced packaging will expand TSMC’s growing operations in Japan where it has just built a plant and announced another – both on the southern island of Kyushu, which is a chip manufacturing hub.

TSMC is partnering with companies including Sony and Toyota and the total investment in the Japan venture is expected to exceed $20 billion.

The chip maker also established an advanced packaging research and development center in Ibaraki Prefecture, northeast of Tokyo, in 2021.

Japan is seen to be well-positioned to play a bigger role in advanced packaging, as it has leading semiconductor materials and equipment manufacturers, growing investment in chip manufacturing capacity and a solid customer base.

A senior official at Japan’s Industry Ministry said advanced packaging would be welcomed in Japan given the ecosystem it can offer to support it.

However, TrendForce analyst Joanne Chiao said that if TSMC were to build advanced packaging capacity in Japan, she expected its scale would be limited.

It’s not yet clear how much demand there will be for CoWoS packaging within Japan, he said, and most of TSMC’s existing CoWoS customers are in the United States.

TSMC’s plans in Japan have so far been supported by generous subsidies from the Japanese government, which – after losing out to South Korea and Taiwan – views semiconductors as vital to its economic security.

This has led to an increased investment flow from many chip companies in Taiwan and elsewhere.

Intel is also considering setting up an advanced packaging research facility in Japan to deepen ties with local chip supply chain companies, two separate sources familiar with the matter said.

Intel declined to comment.

Samsung is setting up an advanced packaging research facility in Yokohama, southwest of Tokyo, with government support.

Reuters reported that the South Korean chip maker is also talking to companies in Japan and elsewhere to buy the material as it prepares to introduce packaging technology used by rival SK Hynix to hold high-bandwidth memory chips. Still working.

(Reporting by Sam Nussey, Fanny Potkin and Miho Uranaka; additional reporting by Ben Blanchard in Taipei; editing by Edwina Gibbs)

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