The Japanese government will allocate up to 476 billion yen ($3.6 billion) for a Taiwan Semiconductor Manufacturing Co. subsidiary to use in funding the ongoing construction of a plant in southwestern Japan, the industry minister said Friday.

In a bid to secure a stable supply of chips, the government backed the plan by Japan Advanced Semiconductor Manufacturing Inc., a joint venture of TSMC, Sony Semiconductor Solutions Corp. and Denso Corp., to set up the factory in Kumamoto Prefecture, industry minister Koichi Hagiuda said.

Amid global chip shortages, Japan is aiming to improve the nation's economic security by supporting the subsidiary of the world's largest contract chipmaker, with Terushi Shimizu, president and CEO of Sony Semiconductor Solutions, saying he felt "emboldened" by the plan.

Photo taken from a Kyodo News helicopter on April 5, 2022, shows a site in Kumamoto Prefecture, southwestern Japan, of a chip plant to be built by a subsidiary of Taiwan Semiconductor Manufacturing Co. (Kyodo)

The construction of the plant capable of producing 55,000 12-inch wafers per month started at a 213,000-square-meter lot in April. About 1,700 people are expected to work at the chip manufacturing and research facility.

"We are hoping that it will continuously contribute to the development of the semiconductor industry for the future, in addition to resilience of the semiconductor supply chain in our country," Hagiuda said at a press conference.

He also said the ministry, local companies and educational institutions are trying to cultivate semiconductor talent as securing necessary human resources becomes increasingly important in an era of digitalization and decarbonization.

Since TSMC has offered its support for developing such talent in Japan, the government will learn from examples in Taiwan as well, he added.

Shimizu also said the venture has become the "impetus" for the cultivation of new talent in the field, while TSMC CEO C.C. Wei said he was confident it would "contribute to the development of the local community."

The $8.6-billion plant in Kikuyo invested in by TSMC, Sony and Denso, a Japanese auto parts maker, aims to begin operations in December 2024.

Koji Arima, president and CEO of Denso, said the plan aims to "stabilize the procurement of semiconductors in the medium- to long-term and contribute to the entire auto industry."

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