Toyota secures more semiconductor supply with new Japan factory

TOKYO — Japan is determined not to get burned again by a chip shortage.

The country's top carmaker, Toyota, and one of its electronics giants, Sony, are investing in a second semiconductor manufacturing plant to be built here by one of the world's top chipmakers.

The new investment, announced Feb. 6, will fund a second plant on Japan's southwestern island of Kyushu in a complex that is majority owned by Taiwan Semiconductor Manufacturing Co.

TSMC is the world's largest dedicated chipmaker. It had already announced plans for a Kyushu plant that begins operations this year. The second one will start making chips by the end of 2027.

The plant in Kumamoto prefecture will be run under a joint venture called Japan Advanced Semiconductor Manufacturing Inc. It is majority owned by TSMC, with minority stakes held by Toyota Motor Corp., Sony Semiconductor Solutions Corp. and Toyota-affiliated mega-supplier Denso Corp. Total investment in both plants will exceed $20 billion, TSMC said.

The site will have production capacity of more than 100,000 12-inch wafers a month starting for automotive, industrial, consumer and high-performance computing applications. It will create 3,400 jobs.

The project is part of a Japanese government-backed effort to seed locally sourced semiconductors, following the global shortage that roiled the automotive and electronics sectors.

Japanese automakers say they have largely put the bottlenecks behind them. But companies around the world are racing to shore up supply chains so there won't be a repeat.

Securing stable sources of microchips, especially next-generation ones for software-defined vehicles, is a top priority. Making them locally helps insulate against external shock. It also decouples operations from Chinese suppliers for logistical and geopolitical reasons.

General Motors said this month it reached a long-term agreement with semiconductor maker GlobalFoundries to increase its future supply of U.S.-made microchips.

The Kumamoto plant being built by TSMC comes on top of another being built by Toyota, Denso and other big Japanese companies on Japan's northernmost main island of Hokkaido.

That newly formed consortium is called Rapidus Corp. and will start producing cutting-edge, next-generation computer chips by the late 2020s.

Workers broke ground on that plant, in the city of Chitose, in September. Pilot production is set to begin in April 2025 with mass production commencing in 2027.

Rapidus will mass produce 2-nanometer semiconductors for cars, robots, consumer electronics and data centers. The 2-nanometer node chip is projected to achieve 45 percent better performance and 75 percent more energy efficiency than today's 7-nanometer chips.

Toyota and Denso, along with six other Japanese blue chips — Sony Group Corp., Softbank Corp., NEC Corp., Nippon Telegraph and Telephone Corp., MUFG Bank and Kioxia Corp. IBM, which claims credit for developing the world's first 2-nanometer node chip — will jointly develop the chips with Rapidus.