TSMC and Sony are developing a new factory to produce semiconductor chips and end the crisis in the automotive sector

The total investment in TMSC and Sony's new factory project is estimated at 800 billion yen (R$ 38 billion), the Japanese government will provide up to half of the amount in the intention of resuming activities in the automotive sector.      

Taiwan Semiconductor Manufacturing (TMSC), the world's biggest chipmaker, and Sony Group are considering jointly building a semiconductor chip factory in western Japan amid a global chip shortage. Japan's leading auto parts maker Denso is also looking at ways to participate in the investment. Toyota Motor is the only automaker still steadily getting supplies by tapping into demand for chips used in its auto parts.  

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Sony reuses semiconductors to overcome the crisis in the automotive industry

Sony may also have a minority stake in a new company that will manage the factory, which will be located in Kumamoto Prefecture, on land owned by Sony and in an area adjacent to the sensor factory.

The factory will make semiconductors used in camera image sensors, as well as automotive chips and other products, and is expected to be operational in 2024. Plans for the facility - which would be TSMC's first chip production operation in Japan – come as the global technology industry grapples with unprecedented semiconductor shortages and supply chain disruptions.

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TMSC confirmed in July that it was "actively reviewing" plans for the project. The Japanese government, which is increasingly concerned about maintaining supply chain stability amid chip shortages and rising tensions over the Taiwan Strait, will support the project with subsidies.

Japanese chip makers dropped out of the race to develop large-scale chips in the 2010s and instead contracted out high-end semiconductor production to companies such as TSMC. By accepting direct investment from the Taiwanese company, Japan hopes to resume production of advanced products in the country with Sony.

Sony and TMSC partnership for semiconductor production could alleviate auto industry crisis  

Sony controls half of the world's market share for sensors used in smartphones and cameras, with manufacturing bases in Kumamoto and Nagasaki prefectures. The sensors are manufactured in-house, but the semiconductors that process the images are purchased from third parties, including TSMC.

Sony CEO Kenichiro Yoshida has previously said that the ability to steadily source semiconductors is important to maintaining Japan's international competitiveness. As the global semiconductor shortage worsens, the presence of TSMC, which has the largest share of the global contract manufacturing market, is growing. 

At the behest of the US government in 2020, TSMC decided to build a $12 billion factory in Arizona. And in February the company announced it would establish a research base in Tsukuba, Ibaraki Prefecture.

The Japanese government plans to subsidize half of the total cost of the project. The funding will be included in the supplementary budget for the 2021 fiscal year, which will be finalized after the lower house election on 31 October.

Japan should have priority in the supply of semiconductors

In exchange for subsidies, the government will seek a compromise that gives priority to supplying chips to the Japanese market. As tensions between China and the US rise, semiconductors are increasingly important for economic security as they form the basis of various industries. 

Even in the Brazilian automotive market, the semiconductor crisis is considered an “unprecedented” crisis, combined with the drop in demand in the domestic market with the worsening of the pandemic, which led to the total or partial stoppage of 13 of the 23 car assemblers in the country , which add up to 29 factories stopped, out of a total of 58.

The data are from Anfavea (National Association of Motor Vehicle Manufacturers). With the stoppage of production in the Brazilian market, specialists in the automotive sector estimate that up to 300 thousand vehicles may not be produced this year. And between 60% and 70% of the approximately 105 direct employees in the sector are at home right now.