Japan will provide 600 billion yen ($ 5.2 billion) as part of its supplementary budget for fiscal 2021 to support advanced semiconductor manufacturers, Nikkei reported.

About 400 billion yen ($ 3.47 billion) will be invested in a new chip manufacturing unit to be set up by TSMC (Taiwan Semiconductor Manufacturing Co), the world’s largest chip maker in partnership with Sony Semiconductor Solutions Corporation .

The construction of the chip manufacturing plant will cost 800 billion yen ($ 7 billion). Construction is expected to begin in 2022 and the plant is expected to start producing chips by 2024.

The joint venture, which will be called Japan Advanced Semiconductor Manufacturing, Inc. (“JASM”), will be established in Kumamoto, Japan, to provide a foundry service with initial 22/28 nanometer process technology to meet the strong global market demand for specialized technologies. Sony will invest up to $ 500 million and will not own more than 20% of the capital of the joint company.

US memory chip maker Micron Technology and national wafer Kioxia Holdings are other semiconductor manufacturing companies that may receive subsidies from the Japanese government.

In October, Micron Technology announced plans to invest more than $ 150 billion globally over the next decade in the manufacture and research and development (R&D) of advanced memory chips, including expansion potential factories in the United States.

Japan is currently pursuing a comprehensive strategy to attract semiconductor companies abroad, including designing generous financial incentives.

Japan lags behind South Korea and Taiwan in advanced chip manufacturing. It imports over 60% of its semiconductors, much of it from Taiwan and China.

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