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Taiwan’s Powerchip considering five sites in Japan for $5.4 bln factory

The logo of Powerchip Semiconductor Manufacturing Corp's Japanese business in pictured in Tokyo, Japan July 21 2023. REUTERS/Sam Nussey/File Photo

As negotiations for subsidies advance, Taiwan’s Powerchip Semiconductor Manufacturing Corp (6770. TW) reportedly evaluates five locations in Japan, including Mie prefecture, to construct a potential $5.4 billion facility.

Powerchip declared in July that it was forming a joint venture with the Japanese banking institution SBI Holdings (8473.T) to get government subsidies for constructing a facility in Japan.

According to two people who declined to be named because the material is private, those negotiations are moving forward.

One source estimated that the facility would cost around 800 billion yen ($5.35 billion), with Powerchip lobbying for subsidies to help defray some of the expense of the initial phase.

According to the source, Powerchip is considering five potential locations for manufacturing. According to two reports, one possibility is the Mie prefecture in central Japan, which is adjacent to the city of Nagoya’s industrial core and fabs run by the Japanese company Kioxia and Taiwan’s UMC (2303. TW).

Requests for comment from Powerchip went unanswered. A spokeswoman for SBI stated that talks with the Japanese government are underway and that a formal application for subsidies for the 420 billion yen first phase is being prepared.

With incentives for both local and international chipmakers, Japan is attempting to revive its chip sector, which still has an advantage in materials and equipment but has lost its manufacturing clout.

Furthering their commitment to manufacturing in Japan, Taiwanese chipmakers like TSMC (2330. TW) have built one facility in Kyushu in western Japan and are considering adding another. Powerchip’s factory would be the first of these.

According to Reuters, the world’s largest contract chipmaker, TSMC, has grown more optimistic about Japan as a production hub because of its hardworking workforce and approachable administration.

According to Reuters, Powerchip believes there is room for more foundry capacity in Japan, which has seen a decline in investment in recent years and plans to list the joint venture in five to seven years.

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