Sam Nussey, Fanny Potkin and Miho Uranaka
TOKYO (Reuters) – Taiwan’s TSMC is considering setting up advanced packaging manufacturing capacity in Japan, according to two people familiar with the matter, a move that would add momentum to Japan’s efforts to reboot its semiconductor industry.
Discussions are at an early stage, they added, requesting anonymity because the information was not public.
One of the options the chip giant is considering is bringing its chip packaging technology on wafer-on-substrate (CoWoS) to Japan, according to one of the people briefed on the matter.
CoWoS is a high-precision technology that involves stacking chips on top of each other, increasing processing power while saving space and reducing power consumption.
Currently, all of TSMC’s CoWoS facilities are located in Taiwan.
No decisions have been made on the scale or timing of potential investments, the source said.
TSMC, formally known as Taiwan Semiconductor Manufacturing Co., declined to comment.
Demand for advanced semiconductor packaging has surged around the world in tandem with the artificial intelligence boom, prompting chipmakers including TSMC, Samsung Electronics (KS:) and Intel (NASDAQ:) to ramp up capacity.
TSMC CEO CC Wei said in January that the company plans to double CoWos output this year, with further increases planned for 2025.
The expansion of advanced packaging capacity will expand TSMC’s growing operations in Japan, where the company just built one plant and announced another, both on the southern island of Kyushu, a chip manufacturing hub.
TSMC cooperates with companies such as Sony (New York Stock Exchange:) and Toyota (NYSE:), with total investment in the Japanese operation expected to exceed $20 billion.
In 2021, the chipmaker also opened an advanced packaging research and development center in Ibaraki Prefecture, northeast of Tokyo.
Japan is also well positioned to play a larger role in advanced packaging, given that it has leading semiconductor materials and equipment manufacturers, growing investment in chip manufacturing capacity and a solid customer base.
Improved packaging will be welcomed in Japan, which can offer an ecosystem to support it, a senior official at Japan’s industry ministry said.
TrendForce analyst Joan Chiao, however, noted that if TSMC sets up advanced packaging facilities in Japan, she expects their scale to be limited.
It’s unclear what the demand for CoWoS packaging will be in Japan, and most of TSMC’s current CoWoS customers are in the United States, she said.
TSMC’s plans in Japan have so far been supported by generous subsidies from the Japanese government, which – after losing ground to South Korea and Taiwan – views semiconductors as vital to its economic security.
This has spurred an influx of investment from a number of chip makers in Taiwan and other countries.
Intel is also considering setting up an advanced packaging research center in Japan to deepen ties with local chip supply chain companies, two separate people familiar with the matter said.
Intel declined to comment.
With government support, Samsung is establishing an advanced packaging research center in Yokohama, southwest of Tokyo.
The South Korean chipmaker is also in talks with companies in Japan and other countries to purchase materials as it prepares to introduce packaging technology used by rival SK Hynix to catch up with high-bandwidth memory chips, Reuters reported.