Taiwan Semiconductor Manufacturing (NYSE:TSM) is thinking of building a third plant in Japan which would make advanced 3-nanometer chips, Bloomberg News reported citing people with knowledge of the matter.
The chipmaker, which counts Nvidia (NVDA) and Apple (AAPL) as customers, has told ts supply chain partners that it is considering building a third factory, code-named TSMC Fab-23 Phase 3, in the southern Japanese prefecture of Kumamoto, the report added.
TSM is in the process of constructing one fab in Japan for less advanced chips, and plans for a second facility were reported earlier. It was not clear when the company would begin construction of the third faciility.
The company had said during its third-quarter earnings results in October that, production was on track for late 2024 for the (first) Japanese plant.
The 3nm process is the most cutting-edge chipmaking technology commercially as of now. However, by the time the company’s potential third fab is functional, the technology could be one to two generations behind.
If the plan comes to fruition, it would be a vital win for Japan, where the government is providing subsidies worth trillions of yen to woo investments from domestic and foreign semiconductor companies.
In addition to TSM, Japan, has successfully secured investments from Micron Technology (MU), Samsung Electronics (OTCPK:SSNLF), and Powerchip Semiconductor Manufacturing.
The Japanese government has committed 330B yen for Rapidus, which is headquartered in Chiyoda-ku, Tokyo and is building a plant in Chitose City in Hokkaido.
A 3nm fab could cost about $20B, including the machines for production. However, exact expenses would depend on when the facility is contructed and how it acquires land and other materials. It was not clear how much TSM expects to spend on the third facility. Japan typically covers about 50% of the costs of such factories, the report added.
“In Japan, we are currently focused on evaluating the possibility of building a second fab and we do not have further information to share at this time,” TSM said in a statement to Bloomberg.
TSMC is currently contructing a facility in the Kumamoto prefecture, with investments from Sony Group (SONY) and Denso (OTCPK:DNZOY) (OTCPK:DNZOF) which is expected to begin manufacturing chips such as 12nm in late 2024. The company will also build a second facility, close to its first plant, and is anticipated to begin making 5nm chips in 2025, as per the report.