Taiwan Semiconductor Manufacturing Co. has tapped Kumamoto Prefecture, southwestern Japan, as a possible site for a chip plant it is considering building in the country, sources familiar with the matter said Tuesday.

The move comes as the Japanese government, which regards securing a stable supply of semiconductors as important for national security, has been working to attract the world's largest contract chipmaker to set up a factory in the country.

File photo shows a Taiwan Semiconductor Manufacturing Co. plant in Hsinchu, Taiwan. (Photo courtesy of Taiwan Semiconductor Manufacturing Co.)(Kyodo)

TSMC is seeking financial support for building a plant, a government source said, as the construction would require investment of several hundred billion to more than 1 trillion yen ($9 billion).

Kumamoto is known for having an abundance of water, necessary when manufacturing semiconductors. A high concentration of related industries in the prefecture may have also strengthened its appeal for the company, the source said.

Demand for semiconductors is increasing in various fields such as automobiles and electronic devices, and efforts are being made to tackle the current global chip shortage.

Trade tensions between the United States and China, which could disrupt global supply chains, have also turned ensuring a stable supply of semiconductors into a national issue, with TSMC facing a deluge of orders from companies in various countries.

In a new digital industry strategy compiled in June, the Japanese government indicated it would aim to mass-produce advanced semiconductors domestically by cooperating with foreign manufacturers.

TSMC Chairman Mark Liu told a virtual meeting of shareholders this month that the company is aiming to build a plant in Japan. But he did not mention any specific partner or possible construction site.