The Japanese government plans to provide 730 billion yen ($4.9 billion) in additional subsidies for Taiwan Semiconductor Manufacturing Co.'s second plant in Kumamoto Prefecture, as the country aims to bolster its chip supply chain, a source familiar with the matter said Thursday.
The world's largest contract chipmaker is slated to begin operations at its first chip plant in the southwestern prefecture later this year, with the support of 476 billion yen in subsidies.
TSMC is expected to spend a total of around 2 trillion yen to build the two factories in the midst of Japan's efforts to ramp up domestic production of semiconductors with financial aid.
The government sees strengthening chip production at home as vital to its economic security, as dependence on major supplier Taiwan poses geopolitical risks amid tensions between the United States and China over the self-ruled island. A potential crisis in the region could lead to Japan losing access to chip supplies.
Kioxia Holdings Corp., Western Digital Corp. and Micron Technology Inc. are among chip makers receiving subsidies for their plans to ramp up production in Japan.
The Taiwanese company is reportedly considering a third plant in Japan, potentially turning the country into a major global chipmaking hub. TSMC will hold an opening ceremony for the first plant on Saturday.
