Taiwan Semiconductor Manufacturing Co. (TSMC) is advancing its presence in Japan with an ambitious plan to mass-produce cutting-edge 3-nanometer (3nm) chips at its facilities in Kumamoto, situated in southern Japan. According to details reported by a prominent Japanese newspaper, this step involves a total capital expenditure approximating $17 billion, underscoring a significant escalation from previous investment intentions focused on legacy chip technologies.
Previously, TSMC’s expansion framework for its second wafer fabrication plant in the Kyushu region centered on producing chips manufactured using 6- to 12-nanometer process nodes with an investment of about $12.2 billion. The shift toward more advanced 3nm production technologies not only represents a considerable upgrade in technological capabilities but also aligns with global industry trends favoring miniaturized and more power-efficient semiconductor components.
The Japanese government has played a critical role in supporting semiconductor industry expansion, having already extended substantial subsidies to aid TSMC’s Kyushu operations. Reports indicate that Tokyo remains open to increasing financial incentives in support of TSMC’s amplified plans, reflecting its strategic commitment to enhancing domestic semiconductor manufacturing capacity amid growing global competition.
In addition to this 3nm initiative, TSMC’s Japanese subsidiary, Japan Advanced Semiconductor Manufacturing, is concurrently engaged in a separate project involving another wafer fab facility in Kumamoto. This plant, associated with an investment valued at approximately $13.9 billion, targets 6nm chip production with applications including autonomous driving technology and artificial intelligence (AI). Construction for this facility began around October 2025, with expectations to commence production by late 2027.
Apart from nurturing TSMC’s expansion, the Japanese government is actively subsidizing Rapidus, a domestic semiconductor foundry project based in Hokkaido. Rapidus aims to develop next-generation chip manufacturing capabilities domestically. Japanese authorities have concluded that TSMC and Rapidus will each cater to distinct market requirements and applications, a strategic approach designed to minimize direct competition between the two entities within Japan’s evolving semiconductor landscape.
TSMC's continued growth and investment in Japan coincide with the company experiencing robust demand driven substantially by AI-related applications. In January 2026, the chipmaker reported quarterly revenue amounting to $33.73 billion, surpassing analyst forecasts by more than 20% year-over-year. The firm's product portfolio services key global technology players such as Nvidia Corp., which relies on TSMC for its GPU manufacturing, and Apple Inc., dependent on the company for producing iPhone processors among other components.
Regarding TSMC’s market reception, shares closed down 2.98% at $325.74 on a recent trading day but observed a 1% uptick to $328.99 during after-hours trading. Analysis of the company’s stock indicates robust price performance across short-term, medium-term, and long-term horizons, albeit with a relatively modest valuation score as per available equity ranking metrics.
TSMC has not issued formal commentary on these expansion plans following recent media disclosures.