Taiwan Semiconductor Manufacturing Co. is considering building a second chip plant in Japan, following an $8.6 billion factory currently under construction in Kumamoto Prefecture, its chief executive officer said Thursday.

TSMC is also evaluating the possibility of a plant in Europe, CEO C.C. Wei said at a press conference, amid increasing calls for a more geographically diverse supply chain.

Photo taken from a Kyodo News helicopter on Jan. 7, 2023, shows a site in Kumamoto Prefecture, southwestern Japan, of a chip plant to be built by a subsidiary of Taiwan Semiconductor Manufacturing Co. (Kyodo)

Customers' requests and support from the Japanese government would be critical factors when making a decision on the second factory in Japan, Wei said.

The upbeat comments on production came as the world's largest contract chipmaker the same day reported record earnings for 2022, driven by solid demand for chips for 5G network equipment and personal computers.

The chipmaker said its net profit soared 70.4 percent from 2021 to an all-time high of NT$1.02 trillion ($33.5 billion) as sales jumped 42.6 percent to a record NT$2.26 trillion last year.

TSMC is constructing a plant in Kikuyo, Kumamoto, with a plan to hire a total of about 1,700 people, including some 320 people on loan from TSMC.

The top executive said his company aims to begin production at the Kumamoto plant in late December 2024 but stopped short of elaborating on the potential second plant.

Sony Group Corp. and Denso Corp., a major Japanese auto parts maker, are also investing in the Kumamoto factory, along with financial aid from the Japanese government.

The Taiwanese chipmaker is considering the second plant as the government is stepping up efforts to bolster supply chains for critical components, such as semiconductors, to improve the country's economic security.

Wei said the global chip market is expected to shrink by about 4 percent this year, but TSMC's advanced technology will help the company maintain solid earnings.

Chief Financial Officer Wendell Huang said the chipmaker will cut capital spending to a range of $32 billion to $36 billion this year from $36.3 billion in 2022, as global inflation and intensifying competition with rivals have created an unclear business environment.

Kumamoto Gov. Ikuo Kabashima (L) visits the head office of Taiwan Semiconductor Manufacturing Co. in Hsinchu, northwestern Taiwan, on Jan. 12, 2023. (Kyodo)

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