Yahoo Finance Taiwan’s Powerchip to Build $5.3 Billion Japan Foundry With SBI
(Bloomberg) -- Taiwan’s Powerchip Semiconductor Manufacturing Corp. plans to build an ¥800 billion ($5.3 billion) factory in northeast Japan with financing from investment group SBI Holdings Inc. and the Japanese government, the latest boost to the country’s bid to expand its chip manufacturing base.
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The factory will require an initial investment of ¥420 billion, of which Powerchip and SBI will pay for more than half, the companies said. The rest will come from investors, bank loans and government subsidies, they said.
The foundry, to be built in Miyagi prefecture, will begin with mature 40nm and 55nm semiconductors, focus on automotive chips and power controllers and will go online in 2027, the companies said. Japan, home to Toyota Motor Corp. and Honda Motor Co., is a heavy user of such chips, produced by the likes of Tokyo-based Renesas Electronics Corp.
“We’ve made preparations to create an unbeatable foundry and build a semiconductor ecosystem,” SBI Chief Executive Officer Yoshitaka Kitao said at a news conference Tuesday. SBI will pay for around ¥100 billion of the initial investment and seek another ¥100 billion through a new fund it plans to set up, but will not build a foundry without subsidies, he added.
SBI shares rose 2.7%, while Powerchip shares fell 0.2%.
Prime Minister Fumio Kishida’s administration is paying billions of dollars in subsidies to chipmakers moving production to Japan. Spurred by the financial support, Powerchip’s bigger rival and industry leader Taiwan Semiconductor Manufacturing Co. is building a factory in southern Japan, to go online next year.
US memory maker Micron Technology Inc. and domestic players Kioxia Holdings Corp. and Rapidus Corp. are also expanding production in the world’s third-largest economy, helped by government support.
“The automotive chips that Powerchip will focus on are precisely the kind of chips used in vehicles today and will help secure this production base,” Economy Minister Yasutoshi Nishimura said at a regular press conference ahead of the investment announcement. “We want to secure the supplementary budget necessary to strengthen our semiconductor supply chain.”
Japan, which wants to claw back its former leadership in chips, is benefiting from a shift in global supply chains as manufacturers seek to lower reliance on Taiwan and hedge against rising US-China tensions. The US is also offering incentives to chipmakers building American capacity, but progress has been slow.
Japan is “the best place” for semiconductor investment, Powerchip Chairman Frank Huang said.
With so much capacity coming online in Japan, it remains unclear how companies will be able to secure enough engineering talent, given a weak yen.
Powerchip’s move comes as the chip sector fights to regain its footing from a sharp post-pandemic drop in demand. The Taiwanese contract chipmaker saw a tough first half with little profit due to weak sales. It reportedly told investors in July that it will be conservative with capacity expansion going forward.
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