TLDR
- TSMC will produce advanced 3-nanometer chips in Japan for the first time, upgrading from its original plan to make less advanced chips at the Kumamoto facility.
- The company is increasing its Japan investment to $17 billion, up from an initial $12.2 billion budget.
- TSMC plans to spend up to $56 billion on capital expenditures in 2026, a 30% jump from 2025.
- The move diversifies TSMC’s advanced chip production beyond Taiwan and its $165 billion U.S. manufacturing investment.
- TSMC supplies chips for Nvidia AI systems, Apple iPhones, Qualcomm mobile chipsets, and AMD processors.
Taiwan Semiconductor Manufacturing is making a big move in Japan. The chip giant will produce 3-nanometer chips at its Kumamoto facility for the first time.
Taiwan Semiconductor Manufacturing Company Limited, TSM
This marks a major upgrade from the company’s original plans. TSMC initially intended to make less advanced 6nm to 12nm chips at the Japanese site.
The decision came during a meeting between TSMC Chairman C.C. Wei and Japanese Prime Minister Sanae Takaichi. Local Japanese media reported the company would invest $17 billion in the 3nm production plan.
Taiwan Semiconductor $TSM plans to mass produce advanced 3-nanometre chips in Kumamoto in southern Japan with investment totalling $17 billion – Yomiuri via Reuters pic.twitter.com/HHhNVoHJzv
— Evan (@StockMKTNewz) February 5, 2026
That’s a hefty increase from the original $12.2 billion budget for the facility. The higher investment reflects the complexity of advanced chip manufacturing.
The 3-nanometer chips represent some of the most advanced semiconductor technology in commercial use today. These chips power high-performance AI systems, premium smartphones, and autonomous vehicles.
Global demand for cutting-edge semiconductors continues to climb. Companies need these advanced chips to stay competitive in AI and other emerging technologies.
Diversifying Beyond Taiwan
TSMC’s Japan expansion fits into a broader strategy to spread production across multiple countries. The company already committed $165 billion to manufacturing facilities in the United States.
Moving advanced chip production outside Taiwan reduces risk for TSMC and its customers. Geopolitical concerns have pushed tech companies to seek more diverse supply chains.
Japan has been working to rebuild its semiconductor industry through subsidies and partnerships. The country wants to reduce its dependence on foreign chip suppliers.
TSMC’s upgraded plans give Japan a boost in its chip ambitions. Having 3nm production on Japanese soil strengthens the country’s position in the global semiconductor market.
Massive Capital Spending Ahead
TSMC recently announced plans to spend up to $56 billion on capital expenditures in 2026. That’s a 30% increase from 2025 spending levels.
Company executives expect elevated capital spending to continue for the next three years. The spending spree reflects the race to meet surging demand for AI chips.
TSMC serves as the main chip supplier for Nvidia, which dominates the AI semiconductor market. The company also makes processors for Apple iPhones.
Qualcomm relies on TSMC for its mobile chipsets. Advanced Micro Devices also uses TSMC for its processor manufacturing.
Construction on the second Kumamoto fab started in late 2025. The updated roadmap now includes advanced chip production as part of the facility’s next phase.
TSMC faces potential competition from Rapidus, a Japanese government-backed chip manufacturer. Rapidus plans to produce 2-nanometer chips by 2027 with support from major domestic technology firms.
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