TSMC — the Taiwan-based company that fabricates roughly 60 percent of the world's semiconductors and 90 percent of its most advanced chips — is building two factories in Japan's Kyushu region. According to East Asia Forum, Japan secured the investment with US$3.2 billion in subsidies for the first plant and US$4.8 billion for the second. But money alone doesn't explain the choice.
Behind TSMC sits a layer of Japanese companies most consumers have never heard of, whose materials are physically irreplaceable in every modern microchip. According to UK Investor Magazine, Ajinomoto — best known for MSG seasoning — controls essentially 100 percent of the market for the insulating film inside high-performance CPUs. Researchers discovered the material as a byproduct of flavoring production in the 1970s; Intel adopted it for Pentium processors in 1999, and no rival has matched it since. Shin-Etsu Chemical, founded in 1926 as a nitrogen fertilizer maker, now holds the world's number-one position in semiconductor silicon wafers with roughly a 30 percent global share. TOTO, the toilet manufacturer, generates 54 percent of its operating profit from ceramic components used in chip-etching equipment. HOYA and AGC together virtually control 100 percent of the EUV mask blank market — the ultra-flat quartz plates every leading chipmaker depends on to print circuits onto silicon.
This pattern, according to UK Investor Magazine, reflects structural features of Japanese corporate culture: decade-long planning horizons, consumer businesses that bankrolled years of unprofitable materials research, and cross-divisional chemistry knowledge passed between industrial units.
That industrial depth is exactly what TSMC needs. According to East Asia Forum, part of TSMC's struggle with its Arizona factory has been the absence of a dense local supplier network; Kyushu puts the company steps away from the materials and equipment base its fabs depend on. More than 60 firms, including equipment maker Tokyo Electron, have already established a presence in the region.
For policymakers racing to build chip industries at home, the story is a warning: subsidies can lure a factory, but they cannot conjure a supply chain.