(MENAFN- Asia Times)
When you read the words“Silicon Island” you may think of Taiwan – but in Japan the name refers to Kyushu.
A TSMC-Sony joint venture is revitalizing the economy of Japan's large southwestern island. Kyushu was already home to a large and diversified high-tech industry but it needed a boost.
The town of Kikuyo, Kumamoto Prefecture, where the factory is being built, is experiencing a real estate boom, with industrial land prices up 31.6%, commercial land prices up 13.6% and residential land prices up 7.7% in 2022.
The joint venture, called Japan Advanced Semiconductor Manufacturing (JASM), will bring the manufacturing expertise of Taiwan and the world's leading semiconductor foundry to Japan. JASM, which also includes Toyota Group auto parts maker Denso, will produce logic ICs for Sony, Denso and other Japanese customers.
In the nearby city of Kumamoto, the third largest in Kyushu, the business community and general population are looking forward to years of prosperity. Last month, a Japanese accountant on a business trip sent this report from Kumamoto to the head office in Tokyo:
Kumamoto is a castle city. Photo: Kumamoto City Official Guide
The new factory is an excellent fit for Kyushu, whose companies and factories already produce semiconductors, flat panel displays and solar panels as well as the materials, parts, equipment and facilities used to make them.
Kyushu's semiconductor products include memory and logic ICs; microcomputers; discrete, analog, radio frequency and hybrid devices; optoelectronic devices; image sensors; other sensors; and actuators. Production processes employed range from design through device fabrication to final test. Materials include silicon wafers, photomasks, gases and chemicals. Equipment includes wafer processing, inspection, assembly, packaging and test systems.
Final products manufactured in Kyushu include car audio, navigation, driver assist and safety systems, solar and wind power generation equipment, disc drives, digital cameras, and a variety of other electronic machinery.
Kyushu is a net exporter of semiconductors to China, Southeast Asia, India, Europe and North America, and has roughly balanced trade in semiconductors with South Korea and Taiwan. It is a net exporter of semiconductor and flat panel display production equipment to all of those regions except Taiwan and North America, with which it has roughly balanced trade.
The Kyushu Semiconductor & Electronics Technology Innovation Association currently has 245 corporate, academic and governmental members. Corporate members include semiconductor makers Renesas (automotive ICs), Rohm (power devices), Toshiba (discretes and system LSIs) and Sony (image sensors); silicon wafer manufacturers Shin-Etsu and SUMCO; photoresist makers JSR and Tokyo Ohka; and equipment makers Tokyo Electron and ULVAC.
Kyushu (36,782 sq km) is almost exactly the same size as Taiwan (36,197 sq. km). Its population (12.6 million) is just over half that of Taiwan (23.3 million). Kyushu's GDP (about $400 billion at the current exchange rate) is somewhat less than half that of Taiwan (about ¥830 billion), about the same size as that of the Philippines and slightly larger than that of Denmark. Kyushu accounts for about 10% of Japan's total population and total GDP.
In addition to electronics, Kyushu's major industries include autos and auto parts, steel, agriculture, forestry and fishing. Before being chosen as the site of the new semiconductor factory, Kikuyo was best known for its carrots.
The largest city in Kyushu is Fukuoka in the north. Fukuoka Prefecture has the largest number of high-tech companies on the island and is also the center of its steel industry. Investment and real estate prices are rising there as well.
Fukuoka, Kyushu's largest city. Photo: Japan Meetings & Events
Like much of Japan, Kyushu is an earthquake zone. In April 2016, back-to-back magnitude 6.2 and 7.0 earthquakes caused serious damage in Kumamoto city. This is not unusual for the semiconductor industry: Taiwan and Silicon Valley also sit atop the Pacific Ring of Fire. There are nine active volcanoes on the island of Kyushu, including Mount Aso in Kumamoto Prefecture.
Things are looking up for Kyushu now, but recent years have been difficult. The island's population, like that of Japan as a whole, is declining. The birth rate is below replacement and there is net out-migration to Tokyo. Within Kyushu, the population is concentrating in Fukuoka city, which has been growing for the past five years.
The population of Kumamoto city has been declining since 2020, but at average annual rates below 0.2%. New job opportunities created by JASM and related businesses are likely to reverse this trend.
Some Japanese question whether the JASM will pay for itself. Last July in an article entitled“Will TSMC take Japanese taxpayer money and run?” staff writers of the Nikkei business newspaper asked,“How much can Japan really expect in the way of returns from the subsidies?”
“A lot” is the correct answer. The Nikkei writers ignored the positive impact of the investment on job creation, population, and demand for local goods and services. Focusing on the size of the subsidies, they forgot about the dynamics of industrial development – and that TSMC also required subsidies to invest in Arizona.
In December, it was reported that Sony is planning to build another image sensor factory in Kumamoto Prefecture. Construction is expected to start next year. Production could start by the end of 2025.
Meanwhile, real estate speculators are already positioning themselves for the announcement of tsmc's second factory in japan .
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