Leading lawmakers of Japan's ruling party revealed their willingness to offer lucrative subsidies to woo TSMC's investments as the chipmaking giant is reportedly looking to set up another facility in Japan. The potential incentive amount highlights the competition among countries to attract semiconductor investments when industrial policies prevail among major economies.
According to two Bloomberg interviews with Akira Amari and Yoshihiro Seki, chairman and secretary general of the Liberal Democratic Party's group on semiconductors, Japan showed a strong will to support reviving the semiconductor manufacturing ecosystem by providing huge incentives.
Amari told Bloomberg that this is a national strategy that will set the course over the following decades, adding that it is typical for such projects to get subsidies of about one-third of the project cost of semiconductor manufacturing facilities. Seki said governments worldwide are providing substantial support, and Japan cannot attract top companies without proactive actions. Bloomberg reported that the lawmakers expect at least JPY1 trillion (US$7 billion) in chip-related support in an extra budget this year as trillions of yen are the global norm for semiconductors investments.
In addition to the first plant, for which Japan will provide the support of JPY476 billion, TSMC chairman Mark Liu said in June that the company was evaluating building the second plant near the first one, and Nikkan Kogyo reported in July that the construction of the second plant might begin in April 2024, with production expected by the end of 2026. For the subsidies for TSMC's second plant, the lawmakers said it depends on the types of chips to be made and the economic externalities the plant may generate.
In March, UNIDO (United Nations Industrial Development Organization) released a report, "Global Industrial Policy: Measurement and Results," saying the industrial policy has increased dramatically over the past decade, with high-income countries implementing about five times as many industrial policies as low- to middle-income economies. According to the analysis based on applying machine learning to policy texts, UNIDO found that the electronics industry (HS Code 85) is the top 4 industry to be targeted by high-income economies.
The US is among the countries providing colossal subsidies to support domestic manufacturing, with European officials, such as Germany's economics minister Robert Habeck, complaininging that, in a sense, the US declared war by providing a raft of subsidies and tax breaks to attract investments in manufacturing in semiconductors and green energies, reports Financial Times.
