Japan's semiconductor ecosystem strategy seems to be entering an acceleration phase.
On February 24th, TSMC announced the official opening of its first wafer manufacturing plant in Japan, Japan Advanced Semiconductor Manufacturing Co., Ltd., located in Kumamoto Prefecture. On the 27th of the same month, Japanese semiconductor wafer fab Rapidus announced a collaboration with RISC-V chip design unicorn Tenstorrent to jointly promote the manufacturing of AI edge training chips in the 2nm process. By the end of 2023, wafer foundry giant TSMC has also planned to build a factory called JSMC in Japan.
The main semiconductor manufacturers in Japan have been operating under the IDM (Vertical Integration) model, which means that the entire process from chip manufacturing to chip design is completed by a conglomerate company. But the global industry trend is that after TSMC founder Zhang Zhongmou launched an independent wafer foundry business, industrial division of labor became mainstream, and only a few companies still adhere to the IDM model to this day.
The new changes stem from the changes in the global geo environment in recent years, and the previous COVID-19 epidemic once affected the timely supply of chip products at some moments.
This has made the localization construction of semiconductors a trend. Only then did major economies such as Japan, the United States, and Germany actively introduce leading semiconductor institutions, hoping to further drive the joint development of the local semiconductor industry chain.
Therefore, Japan's strong support for semiconductor development at present is a microcosm of the changing global trend, and its progress has also been closely monitored.
Wafer giant landing
Unlike TSMC, which faced a series of problems such as insufficient personnel support and inadequate policy subsidies when it started manufacturing in the United States, its wafer foundries cooperating with Japan are rapidly being implemented.
According to the official website of JASM, TSMC has established a cooperative relationship with the Japanese semiconductor industry for a long time. In 2019, TSMC established its Japan Design Center, and in 2021, it established its Japan 3D IC R&D Center. JASM was established in 2021, and the factory started construction in April 2022. It opened and completed in February 2024, with plans to start production by the end of 2024. This is TSMC's first factory in Japan.
This is officially defined as a significant milestone. Based on JASM Plant 1, companies such as Sony Semiconductor, DENSO (Denso), and Toyota have recently announced that they will further invest and participate in the construction of Plant 2. The plan is to start construction by the end of 2024 and operation by the end of 2027.
As a result, among JASM's shareholders, TSMC holds approximately 86.5% of the shares, Sony Semiconductor holds approximately 6.0%, Denso holds approximately 5.5%, and Toyota holds approximately 2.0%. Taking these two factories into consideration, JASM Kumamoto Factory is expected to provide a monthly production capacity of over 100000 12 inch wafers, with a main process layout in the 40, 22/28, 12/16, and 6/7 nanometer processes for automotive, industrial, consumer, HPC (high-performance computing) and other related applications. With the support of the Japanese government, JASM's total investment will exceed 20 billion US dollars.
Kumamoto Prefecture, where JASM is located, is located in the center of Kyushu, Japan and was once known as the "Silicon Valley" of Japan. It is reported that Kyushu currently gathers more than one-third of Japan's semiconductor companies and many automotive component manufacturers. It can be seen that both from the perspective of industrial integration and talent, there is certain support within the region.
Research firm Jibang Consulting believes that due to its proximity to Sony's existing CIS (Image Sensor) factory in the local area, JASM is also one of JASM's investors. In the future, both parties will have closer cooperation in semiconductor manufacturing and packaging and testing technology.
In addition to the dynamics of TSMC, another wafer foundry giant, TSMC, has also recently made a new layout in Japan. At this time, Japan's statement better reflects its industrialization motivation behind it.
In July 2023, TSMC reached an agreement with Japan's SBI Holdings Co., Ltd. (SBI) to cooperate in the establishment of a 12 inch wafer foundry in Japan. In October of that year, TSMC confirmed that JSMC (collectively known as TSMC Japan) would establish its first wafer fab and select the second North Sendai Central Industrial Park in Miyagi Prefecture, Japan as the planned site.
Li Jidian Chairman Huang Chongren introduced that the company will use processes above 22/28 nanometers and wafer stack (Wafer on Wafer) technology to meet the multiple applications generated by future AI edge computing, while also filling the gap in local automotive chips.
The construction of these two wafer foundries in the local area has received strong support from Japanese official institutions in terms of factory site selection, accelerated infrastructure construction, and subsidies.
Why is it important for semiconductor foundry giants led by TSMC to take root in various economies at present? On the one hand, this is driven by the trend of the global semiconductor industry moving from "globalization" to "localization", and local wafer production capacity is becoming increasingly important; On the other hand, as a core supplier, TSMC can also attract material and equipment manufacturers from upstream and downstream (especially outside of Japan) to gather, which can not only drive local economic and industrial development, but also attract more talent support.
Powerful advanced technology
Currently, TSMC and TSMC's factories in Japan may mainly focus on mature processes, with some of TSMC beginning to extend to more advanced process implementation. In addition to adopting an import approach, Japan also has high expectations for its domestic wafer manufacturing capabilities.
Rapidus is one of them. This wafer foundry, which has also received investment from many local Japanese manufacturers (such as Armor, Sony, SoftBank, Denso, Toyota, NEC, etc., with a total investment of 7.3 billion yen), has been mentioned from the beginning of its establishment. Its medium to long-term (after 2020) business development concept is to promote the development of next-generation semiconductor manufacturing technology through cooperation with the United States and Europe, hoping to achieve advanced wafer manufacturing with a process of less than 2nm in Japan.
Its early controversies may have been fueled by pulling out seedlings, but currently it seems to be approaching this goal. In 2021, IBM announced the development of a 2-nanometer node chip; In December 2022, IBM announced the establishment of a joint development partnership with Rapidus, with both parties expected to pilot around 2025 and begin mass production in 2027. Afterwards, Rapidus also joined the Imec Core Partner Program, planning to acquire EUV lithography technology from it.
In November 2023, Rapidus announced that it would cooperate with the Canadian semiconductor unicorn Tenstorent, mainly based on the AI edge computing chip IP of the 2nm process. In February this year, both sides officially confirmed cooperation on chip development and manufacturing. Tenstorent is a global leader in RISC-V architecture, and its CEO Jim Keller has been involved in the development of Apple's A4 and A5 processor chips. He was also a key figure in AMD's journey to catch up with Intel.
Regarding industrial development, Rapidus President Junichi Koike publicly expressed his reflection in a speech in the middle of last year. He said that since Japan's semiconductor industry accounted for over 50% of the global market share in the 1980s, it has gradually fallen into a slump, possibly due to "pride". Rapidus will adopt a new business model to integrate front-end and back-end engineering to improve efficiency.
"At present, Japan's goal is to regain its previous advantages in regional competition, hoping to transform from being a major raw material country to one of the major semiconductor manufacturing countries." Guo Zuorong, Senior Vice General Manager of Research at Jibang Consulting, analyzed that it is expected that Japan will account for 3% of the global proportion in advanced process technology from basically 0 in 2022 to 2027.
According to the analysis of the institution, Rapidus is located in the Hokkaido region of Japan, and its factory will have the opportunity to attract upstream equipment and raw material suppliers to set up a factory in Hokkaido, driving the formation of semiconductor clusters in nearby areas.
At the same time, local governments in Japan are still striving for TSMC's third plant that has not yet been finalized. In terms of process, the third plant is currently planned to focus on the 6/7 nanometer industry. However, if the time for plant closure is announced, TSMC's most advanced technology has already been extended to 2 nanometers or even 1.4 nanometers. It is not ruled out that 5 nanometers or 3 nanometers will be used as the main force of its third plant in Japan.
Rapidus and official Japanese institutions have also publicly stated that in the wave of automotive intelligence and electrification development, advanced semiconductor capabilities below 2 nanometers will become increasingly important.
From a global trend perspective, most economies are still expanding mature process technology. However, mainstream wafer foundries still face a trend of low capacity utilization, which means that mature processes will face greater challenges in an economic pressure environment. The competition for advanced technology is currently being led by TSMC and gradually extending to active competition between Samsung and Intel. Japan, as a new path ahead, is still difficult to determine. Behind this is a differentiated exploration of technological routes, business models, and other aspects.
But it can be confirmed that as the localization of the industry develops into a global trend, the wafer foundry industry will also face new variables.