Two semiconductor manufacturing plants are currently being constructed in Japan, generating significant attention for their potential to invigorate local communities and drive economic growth. One of these plants, announced by Taiwan Semiconductor Manufacturing Co. (TSMC), the world's leading semiconductor contract manufacturer, is set to be located in the town of Kikuyo, Kumamoto Prefecture. Construction began in April 2022 and is progressing rapidly, with operations expected to commence in late 2024.
The establishment of TSMC in Kikuyo has sparked enthusiasm in the local communities, paving the way for the development of a semiconductor-focused business hub in the area. This has led to increased interest from major Japanese electronics manufacturers, including Mitsubishi Electric and Sony Group, who have announced plans for new plant construction in the surrounding municipalities. Furthermore, companies expecting enhanced collaborations with TSMC are eager to establish a presence in the region.
These developments have driven up land prices in both the host and neighboring municipalities. In Kikuyo, industrial land prices surged by 31.6% in 2022, the fastest increase in the nation, while the adjacent town of Ozu experienced significant rises in standard land prices as well.
The economic impact of these developments is substantial, with projections indicating substantial benefits for the region. The Kyushu Financial Group revised its 10-year estimate for economic benefits resulting from the concentration of semiconductor-related companies in the area, forecasting a significant increase in economic benefits from these developments.
In addition to the TSMC plant in Kikuyo, another semiconductor venture is underway in Chitose, Hokkaido, with Rapidus building a factory with the goal of launching a prototype production line by April 2025. This project, established with funds from major Japanese corporations and receiving government support, is expected to bring about significant investment and economic ripple effects in the prefecture.
Rapidus aims to achieve domestic mass production of next-generation semiconductors with a circuit line width of 2 nanometers by 2027, a technological advancement not yet established anywhere in the world. This ambitious goal is expected to require collaborative initiatives with foreign businesses, such as Dutch company ASML Holding, which plans to establish a technical support base in Chitose.
The developments in Chitose have led to increased demand for accommodation and property, with the city government assuming the role of a "real estate broker," facilitating the establishment of related factories and offices in the city. Moreover, the anticipated expansion in demand for housing and other properties has resulted in significant growth in land prices in the city.
The arrival of Rapidus in Hokkaido has the potential to reshape the local industrial landscape and transform the central Hokkaido area into "Hokkaido Valley," a vision for creating a cluster of semiconductor-related businesses, research institutes, and universities. While local governments within this vision express excitement, concerns have been voiced by officials from areas outside of the planned cluster, highlighting the need to ensure the spread of economic benefits throughout the entire region.
The construction of these semiconductor plants in Japan represents a significant opportunity for economic growth and regional development, with the potential to reshape local industrial landscapes and drive substantial investments and collaborations.
