In what could come as welcome news for the automotive world, Taiwan’s TSMC and Sony Semiconductor Solutions Corporation jointly announced that TSMC will establish a subsidiary for chip production, Japan Advanced Semiconductor Manufacturing (JASM) in Japan. Sony Semiconductor Solutions will be a minority shareholder.

This subsidiary will provide foundry service with initial technology of 22/28-nanometer processes to address strong global market demand for semiconductors and specialty technologies therein.

Construction of JASM’s fab in Japan is scheduled to begin in the 2022 with production targeted to begin by the end of 2024. The fab is expected to directly create about 1,500 high-tech professional jobs and a monthly production capacity of 45,000 12-inch wafers. The initial capital expenditure is estimated to be approximately US$7 billion with strong support from the Japanese government.

Under definitive agreements reached between TSMC and SSS, SSS plans to make an equity investment in JASM of approximately US$0.5 billion, which will represent a less than 20 percent equity stake in JASM. The closing of the transaction between TSMC and SSS is subject to customary closing conditions.

Speaking on the deal, Dr. CC Wei, Chief Executive Officer of TSMC said, “The digital transformation is creating incredible opportunities for our customers, and they rely on our specialty processes that bridge digital life and real life. We are pleased to have the support of a leading player and our long-time customer, Sony, to supply the market with an all-new fab in Japan, and also are excited at the opportunity to bring more Japanese talent into TSMC’s global family.”

Terushi Shimizu, President and CEO of Sony Semiconductor Solutions Corporation added that, “While the global semiconductor shortage is expected to be prolonged, we expect partnership with TSMC to contribute to securing a stable supply of logic wafers, not only for us but also for the overall industry.”

The move is expected to help reduce the supply chain crisis in the automotive industry. Recent monthly data indicates that leading automobile manufacturers in India have resorted to even 60 percent cut in production as a result of the chip shortage.