Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) is investing heavily in Japan to break through cutting-edge processes, and 3-nanometer chips will be produced in Japan by 2028.

Several media outlets reported that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, the world's largest semiconductor foundry company, is expected to start equipment installation and mass production of 3-nanometer wafers at its second factory in Japan in 2028. During a meeting with Japanese Prime Minister Kishida Katsunobu in February, the CEO of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Wei Zhejia, stated that the company plans to achieve mass production of advanced 3-nanometer chips at their second wafer factory in Japan. According to the revised plan disclosed on Tuesday, the second factory in Japan of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR will have a capacity of producing 15,000 12-inch wafers per month using advanced 3-nanometer process technology. Previously, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's focus in Japan was mainly on mature process technology. In 2024, the company announced that the total investment in their first and second factories would exceed 20 billion US dollars, with a total monthly production capacity of 100,000 12-inch wafers, covering mature technologies such as 40-nanometer, 22/28-nanometer, 12/16-nanometer, and 6/7-nanometer. In February of this year, reports in Japan indicated that the total investment in the second factory could reach as high as 17 billion US dollars, but Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR has not confirmed this data or responded to reports on the related investment amount. The first wafer factory of Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR in Japan entered mass production at the end of 2024. In 2021, the company established Japan Advanced Semiconductor Manufacturing Company as its subsidiary in Japan with the support of Sony Semiconductor Solutions Company. Subsequently, Denso Corporation and Toyota Motor Corp. Sponsored ADR also became minority shareholders. Last week, Natarajan Ramachandran, Director of Product Marketing for the Physical Layer Products division of Broadcom Inc., stated on Tuesday that their manufacturing partner, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, is nearing its capacity limit. With the surge in demand for AI chips, the entire industry is facing broader supply chain constraints. He added, "We see that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's capacity has reached its limit," "They will increase capacity by 2027, but this has become a bottleneck, or has already hindered the supply chain by 2026." In January, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR stated that the negotiation cycle with customers is at least 2-3 years in advance. CEO Wei Zhejia stated that capacity is "extremely tight" and the company is accelerating capacity expansion in Taiwan and Arizona to meet the demand for artificial intelligence. "We have been working hard to narrow the supply-demand gap," he added. "It may require greater efforts this year and next year to further narrow the gap."