Taiwan Semiconductor Manufacturing Co. Ltd.’s (NYSE:TSM) Japan arm, Japan Advanced Semiconductor Manufacturing (JASM), has signed an agreement with the government of Kikuyō Town in Kumamoto Prefecture to build its second wafer fabrication plant, which marks the start of construction.
The new facility entails a $13.9 billion investment and will produce 6-nanometer chips for advanced technologies, including autonomous vehicles and artificial intelligence.
Production is expected to start by late 2027, Technode reported on Tuesday.
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The 69,000-square-meter site, located east of the first fab, will add 1,700 jobs, bringing total employment across both facilities to over 3,400.
Backed by a 1.2 trillion yen ($7.8 billion) government subsidy, the project marks Japan’s direct leap from 28nm to 6nm technology.
Infrastructure Challenges Slow Expansion Plans
In June, Taiwan Semiconductor CEO C.C. Wei blamed traffic congestion and infrastructure bottlenecks for delaying the company’s expansion in southwest Japan, slowing the construction of its high-profile Kumamoto chipmaking project.
Despite the setbacks, Wei reaffirmed Taiwan Semiconductor’s commitment to building a second factory in Japan’s Kumamoto Prefecture while managing an ongoing investment in Arizona over the next five years.
U.S. Expansion Faces Labor Hurdles Amid Policy Pressure
However, he told President Donald Trump that completing the massive Arizona project within that timeframe would be challenging due to a labor crisis, Bloomberg reported.
The contract chipmaker’s Japanese expansion has strained the rural region’s limited infrastructure, as an influx of workers from the company’s first plant overwhelms local capacity.
It has also shifted more focus to its U.S. operations following pressure from Washington to accelerate domestic production amid tariff concerns.
Chairman C.C. Wei cited regional traffic issues as a contributing factor to the delay, though analysts say U.S. policy incentives and tariff risks have made American expansion more urgent.
Earlier this year, Wei announced an additional $100 billion investment in U.S. chip production, bringing the total to $165 billion, which includes the $65 billion already committed since 2024.
Price Action: TSM stock was trading lower by 0.42% to $296.99 premarket at last check Tuesday.
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