Japan's endeavor to enhance its chip industry is receiving a significant boost through the establishment of an advanced packaging facility by TSMC. This move complements TSMC's existing $7 billion front-end chip manufacturing fab constructed in Kumamoto, located on the southern island of Kyushu in Japan.
The addition of a back-end packaging facility serves to augment the chip manufacturing ecosystem in Japan amid efforts to diversify semiconductor supply chains beyond Taiwan, driven by geopolitical tensions. Media reports have been buzzing with speculation about TSMC's plans to establish an advanced packaging plant, a notion further supported by a recent Reuters article.
In particular, TSMC has already set up an advanced packaging R&D center in Ibaraki prefecture, located northeast of Tokyo, in 2021. The surge in demand for advanced semiconductor packaging can be attributed to the increasing need for high-end chips used in artificial intelligence (AI) and high-performance computing (HPC) applications. Additionally, the growing prominence of chiplets has brought advanced packaging technologies to the forefront of the industry.
Given these factors, TSMC, known as the world's largest semiconductor factory, is compelled to expand its packaging capacity. As part of this expansion, TSMC is working on establishing a new packaging facility in Chiayi, southern Taiwan. However, TrendForce analyst Joanne Chiao suggests that TSMC's advanced packaging facility in Japan may be relatively limited in scale, primarily due to the majority of TSMC's packaging customers being located in the United States.
With the introduction of this new plant, TSMC's advanced CoWoS packaging technology is set to be transferred to Japan. CoWoS is a 2.5D wafer-level packaging technology developed by TSMC that enables multiple dies to be integrated on a single substrate, offering enhanced performance and integration density compared to traditional packaging methods. Currently, TSMC's CoWoS packaging capacity is entirely based in Taiwan.
By establishing a packaging facility in Japan, TSMC gains closer access to leading semiconductor materials and equipment suppliers in the country, as well as a solid customer base. Furthermore, TSMC stands to benefit from significant subsidies provided by the Japanese government, aiming to rejuvenate the local semiconductor industry following competitive challenges from South Korea and Taiwan.
While details regarding the scale and timeline of constructing the advanced packaging facility remain undisclosed, reports indicate that no final decisions have been made yet. TSMC has refrained from commenting on the matter. Nonetheless, industry experts are confident that the development of TSMC's fab in Kumamoto signifies a step towards establishing an advanced packaging facility in Japan in the near future.
