Key Takeaways:

• Japan aims to shift from 28nm to 4nm semiconductor process technology.
• TSMC plans to upgrade its Kumamoto factory in response to rising AI chip demand.
• The possibility of transitioning to advanced packaging solutions could enhance Japan’s semiconductor landscape.

Japan’s Semiconductor Industry Poised for a Technological Leap: From 28nm to 4nm

Once a global leader in semiconductor manufacturing, Japan’s industry has seen significant transformations over the years. With advancements on the horizon, the nation is now strategically positioned to leapfrog from the traditional 28nm process node directly to 4nm technology. This shift is driven by recent developments at the Kumamoto Factory 2, backed by TSMC’s investment.

Initially, TSMC’s Kumamoto facility was slated for an upgrade to the 6/7nm process. However, market dynamics changed. The demand for 6/7nm chips has become subdued, prompting a halt in production. Instead of abandoning its investment commitments, TSMC is contemplating a strategic pivot. The company is expected to redirect its focus on upgrading the second phase of the factory to the 4nm process, aligning with the escalating demand for artificial intelligence (AI) chips.

While TSMC has refrained from commenting directly on market speculations, they assure stakeholders that the project in Japan is ongoing. However, the suspension of production at the newly established phases has raised concerns. Notably, expansion plans for the first phase, which primarily produces chips at 40/28nm and 16/12nm, have also been placed on hold. Originally, new equipment was expected to be introduced by 2026, but TSMC has recently indicated to suppliers that there will be no new installations next year.

Transitioning the Kumamoto factory to a 4nm process is not a straightforward endeavor. This transition necessitates advanced equipment, specifically EUV (Extreme Ultraviolet) lithography, leading to increased investment and design complexities. Furthermore, should the factory pivot from chip production to focus on advanced packaging solutions, it could present an alternative route. Currently, there is a rising demand for CoWoS (Chip on Wafer on Substrate) packaging in AI chips. Historically, TSMC has managed CoWoS production locally, and expanding this capability in Japan could address ongoing capacity constraints in AI chip manufacturing.

While the final direction of TSMC’s Kumamoto operation has yet to be confirmed, the choices they face present promising prospects for Japan’s semiconductor landscape. Moving toward either advanced chip production or enhanced packaging capabilities would mark a significant advance in the country’s technological competencies.

As Japan positions itself to reclaim its place in the semiconductor ecosystem, the collaboration between TSMC and local entities could foster innovation and revitalization. The advancement in manufacturing technology not only caters to domestic demand but also enables Japan to reestablish a footing on the global stage, particularly in the AI sector.