**TSMC CEO C. C. Wei Cites Traffic Issues for Japan Expansion Delays**
Taiwan Semiconductor Manufacturing Co. (TSMC) Chief Executive Officer C. C. Wei has attributed delays in the company’s expansion in southwestern Japan to worsening traffic conditions, despite a concurrent expansion effort in the United States progressing rapidly. Wei reiterated TSMC’s commitment to invest an additional $100 billion in manufacturing facilities in Arizona over the next five years. He highlighted productive discussions with former President Donald Trump earlier this year, although he cautioned that completing such a significant buildout within five years would be “very, very difficult” due to a shortage of skilled labor. Wei described Trump as “warm” during their conversation.
These dual projects reflect TSMC’s strategy to enhance production capabilities abroad amid rising geopolitical tensions and increasing demand for Nvidia Corp. chips, which are crucial for artificial intelligence development. Historically, TSMC has primarily operated from Taiwan but established a plant in Japan after securing various commitments and incentives from the Japanese government. Shortly after Trump took office, TSMC announced plans to significantly boost its investment in the U.S.
During a recent shareholders’ meeting in Hsinchu, Taiwan, Wei shared his personal experience with the local traffic, stating, “We have created too big an impact on the local traffic. What used to take a 10-15 minute drive now takes almost an hour.” He informed reporters that TSMC has communicated with the Japanese government about delaying construction until traffic conditions improve, to which the government responded that they would expedite improvements. However, Wei did not specify the duration of the delay, which he described as minor.
As the world’s largest contract chipmaker, TSMC plays a pivotal role in the global technology supply chain, manufacturing advanced chips for major companies like Apple Inc. and Nvidia. Governments worldwide, from Washington to Brussels, have courted TSMC, especially following semiconductor shortages during the pandemic that disrupted production across various industries, including automotive and consumer electronics.
The planned second factory in Kumamoto Prefecture is crucial for Japan’s ambitions to reclaim its semiconductor leadership and attract engineers to its aging workforce. However, the influx of workers from TSMC’s first plant has already strained rural infrastructure, while the company’s ongoing projects in the U.S. have lessened the urgency for production in Japan. This situation echoes previous challenges faced in ramping up production at TSMC’s new facilities in Arizona, although the company has made significant progress since then.
Japanese municipalities can access central government subsidies to enhance infrastructure, such as roads, to attract foreign factories. However, in a country where many have strong ties to ancestral land, acquiring property rights for road expansions can be a lengthy process, often taking years or even decades.
In summary, while TSMC’s expansion plans in Japan face temporary setbacks due to traffic issues, the company’s commitment to global manufacturing growth remains steadfast, reflecting the ongoing demand for semiconductor technology in an increasingly competitive landscape.
**FAQ**
**What are the main challenges TSMC faces in expanding its Japan operations?**
TSMC is currently facing delays in its Japan expansion due to worsening traffic conditions, which have impacted local infrastructure. The company has communicated with the Japanese government about these issues and plans to delay construction until improvements are made.