Taiwan Semiconductor Manufacturing Company is expanding its operations to Kikuyo, Japan, establishing a chip fabrication factory in the small town. This move is part of a larger effort to diversify the global semiconductor supply chain and reduce reliance on Taiwan, amid geopolitical tensions and disruptions caused by the Covid-19 pandemic. The Japanese government has invested billions of dollars to support this initiative, with significant contributions from local companies such as Sony, Denso, and Toyota, which are major buyers of TSMC semiconductors. Signs in traditional Chinese characters now line the streets of Kikuyo, reflecting the town’s growing population of foreign workers and suppliers.
The establishment of a high-tech factory town in Kikuyo is transforming the semiconductor industry, which has historically been dominated by a few factories in Taiwan. In response to the risks associated with concentrated production, governments around the world are investing heavily in expanding chip manufacturing capabilities locally. TSMC, a key player in this industry, has committed to building new fabs in the United States, Japan, and Germany. While its American factories have faced delays, the fab in Japan is already operational and expected to be fully functional by the end of the year. Japan has pledged $26 billion to revive its chip industry, with a focus on automotive chips, requiring additional investments in infrastructure, skilled labor, and housing.
The rapid development of the TSMC fab in Kikuyo has attracted thousands of workers from suppliers like Applied Materials and Tokyo Electron, who are now contributing to the local economy. TSMC’s presence in Kikuyo has also led to increased salaries and improved working conditions for employees, prompting other businesses in the area to follow suit. The company’s established network of suppliers and skilled workers in Taiwan has facilitated its expansion into Japan, and analysts believe TSMC can replicate its success outside of Taiwan, despite facing challenges in other locations like Arizona. The company remains committed to keeping its most advanced operations in Taiwan, while continuing to invest in international expansion.
In Japan, steps are being taken to address the shortage of skilled workers in the semiconductor industry, with local engineers being trained and hired by TSMC. The technical college in Kumamoto has increased its offering of electrical engineering courses to support the growing demand for talent. Local businesses and investors in the region are also benefitting from the economic boom driven by TSMC’s presence, with real estate prices on the rise and a surge in property transactions. Concerns around housing availability and affordability have emerged, as new arrivals seek move-in ready accommodations similar to those in urban Taiwan.
The growth of Kikuyo as a semiconductor hub has created opportunities for local businesses, investors, and residents, while also raising questions about the long-term impact of rapid development on the town’s infrastructure and environment. As more workers and suppliers flock to the area, the demand for housing, transportation, and services is expected to increase. TSMC’s expansion into Japan represents a significant shift in the global semiconductor industry, with implications for supply chain resilience, economic development, and technological innovation. The success of this venture will depend on the ability of stakeholders to collaborate effectively and address challenges related to workforce development, infrastructure investment, and community engagement.
