Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry, has reportedly delayed the groundbreaking for its second factory in Kumamoto Prefecture, Japan. While the official reason given is traffic congestion, the postponement appears to be due to a combination of slowing market demand and strategic adjustments to global investments.
TSMC had initially planned to begin construction on its second facility, located near its existing Kumamoto plant, by March of this year. However, the timeline has now been pushed back to later in the year. In response, Chairman and CEO Che Chia Wei explained to the reporters after a shareholders’ meeting early this month that the delay was due to local traffic issues.
However, the members of the Kumamoto Prefectural Assembly are questioning this explanation. One representative pointed out that it is difficult to accept that traffic congestion is the reason for a construction delay, unlike high prices. The assembly member added that it would be a problem if construction is further postponed for the same reason. Notably, the area has long grappled with chronic traffic congestion, prompting ongoing efforts by local authorities to address the issue.
Industry insiders speculate that TSMC’s decision may be influenced by uncertainties in global semiconductor demand. Toru Imamura, a former president of NEC Kyushu and current industrial promotion advisor for Kumamoto, suggests that TSMC might be waiting to confirm market demand before proceeding. He analyzed that with electric vehicle demand stagnating, the semiconductor market outlook remains unclear.
TSMC is currently pursuing the construction of multiple large-scale foundry projects worldwide, including sites in Arizona, USA, and Dresden, Germany. The delay in Kumamoto may be part of a broader reassessment of the company’s global investment priorities.
