The economic benefit of TSMC's wafer factory in Kumamoto, Japan is larger than what was observed in 2022. Latest estimates have increased by 60% from the original basis made by a Japanese financial institution.
According to Japanese media outlets such as Nikkei, Fuji News Network, and NHK, Kyushu Financial Group, a Japanese financial institution, recently announced a new estimate of JPY 6.9 trillion for TSMC's economic benefit to Kumamoto, about 60% higher than the original estimate.
The original estimate made in September 2022 was JPY 4.3 trillion (US$295 billion). This figure was also cited by the Japanese government as one of the achievements of its policy to subsidize semiconductor production in Japan. Kyushu Financial Group calculated the economic benefits that TSMC's Kumamoto wafer fabs will contribute to Kumamoto Prefecture over a 10-year period from 2022 to 2031.
The main reason for the increase is the stronger-than-expected attraction effect of TSMC's wafer factory in Kumamoto than what was observed in 2022. For example, Sony announced a new investment in 2023 to purchase a factory site in Hasi City, Kumamoto Prefecture to build a new CIS factory, which is seen as a new spillover effect of TSMC's Kumamoto plant.
If the semiconductor production of TSMC's Kumamoto plant is included, it is estimated that the annual production value will reach JPY400–800 billion from 2025 after it begins operation at the end of 2024.
Related supply chains are also flocking to Kumamoto and its surroundings to set up factories. Mitsubishi Electric and other companies are also building new factories in Kumamoto Prefecture. This also includes investments in factory equipment, land development, employee housing, the formation of a semiconductor industry cluster, and multiple industries such as electricity and transportation.
On the other hand, TSMC's Kumamoto plant aims to source 50% of its materials and equipment from Japan. Kyushu Financial Group estimates that this goal is still a long way off, and will promote overall equipment investment in Kyushu from a financial institution perspective.
The above estimates do not include the possible construction of a second TSMC wafer factory in Kumamoto. If this is taken into account, the economic benefits will be even higher.