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Exclusive: TSMC contemplating advanced chip packaging capacity in Japan, sources say

Taiwan Semiconductor Manufacturing Company's (TSMC) logo is shown when people attend the inauguration of the TSMC global R&D center in Hsinchu, Taiwan July 28, 2023

TOKYO, March 18 (mod1s) - Taiwan's TSMC (2330.TW), opens new tab is considering at establishing advanced packaging capacity in Japan, according to two individuals familiar with the topic, a move that would add impetus to Japan's attempts to resuscitate its semiconductor sector. 

The talks are at an early stage, they said, refusing to be named since the information was not public. 

One possibility the chipmaking giant is investigating is introducing its chip on wafer on substrate (CoWoS) packaging technology to Japan, according to one of the persons who was informed on the topic.

CoWoS is a high-precision technique that includes stacking chips on top of each other, enhancing processing capability while conserving space and lowering power usage. 

Currently, all of TSMC's CoWoS capability is in Taiwan. 

No decisions on the amount of or the timetable for a prospective investment have been made, the person added. 

TSMC, previously known as Taiwan Semiconductor Manufacturing Co, refused to comment.

Demand for sophisticated semiconductor packaging has increased internationally in concert with the artificial intelligence boom, prompting chipmakers like TSMC, Samsung Electronics (005930.KS), opens new tab and Intel (INTC.O), opens new tab, to raise capacity. 

TSMC Chief Executive C.C. Wei announced in January that the firm intends to treble CoWos production this year with additional increases anticipated in 2025. 

On Monday, TSMC announced it was developing extra advanced packaging capacity in Chiayi in southern Taiwan to response to increasing market demand, without offering specifics.

Construction of a new Chiayi CoWoS facility is set to commence in early May, the island's official Central News Agency cited Vice Premier Cheng Wen-tsan as saying. 


Building capacity for sophisticated packaging would expand TSMC's burgeoning activities in Japan where it has already constructed one factory and planned another - both on the southern island of Kyushu, a chipmaking hotspot. 

TSMC is cooperating with firms like Sony (6758.T), opens new tab and Toyota (7203.T), opens new tab with total investment in the Japan venture estimated to run to more than $20 billion.

The chipmaker also constructed an advanced packaging research and development unit in Ibaraki prefecture, northeast of Tokyo in 2021. 

Japan is viewed as well positioned to assume a greater role in advanced packaging given that it has top semiconductor materials and equipment producers, significant investment in chip manufacturing capacity and a robust customer base. 

Advanced packaging will be welcomed in Japan which can give the ecosystem to support it, a top official at Japan's industry ministry said. 

TrendForce analyst Joanne Chiao added, however, that if TSMC were to create advanced packaging capacity in Japan, she anticipated it would be restricted in size. 

It was not yet obvious how much demand there would be for CoWoS packaging inside Japan and most of TSMC's existing CoWoS clients are in the United States, she noted. 

TSMC's aspirations in Japan so far have been backed by hefty subsidies from the Japanese government which - after losing ground to South Korea and Taiwan - regards semiconductors as important to its economic security. 

That's driven an infusion of investment from a spectrum of semiconductor businesses from Taiwan and others. 

Intel is also exploring at creating an advanced packaging research unit in Japan to enhance relations with local semiconductor supply chain businesses, two different individuals familiar with the topic said.
Intel refused to comment. 

Samsung is putting up an advanced packaging research lab in Yokohama, southwest of Tokyo, with government funding. 

The South Korean chipmaker is also talking to firms in Japan and abroad about purchasing materials as it prepares to deploy a packaging method used by its competitor SK Hynix (000660.KS), opens new tab to catch up in high bandwidth memory chips, Reuters has reported.


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