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Most of Japan's 180 local-government pacts with Taiwan were signed after TSMC's move into Japan
Japanese local governments hold about 180 pacts with Taiwanese counterparts, two-thirds signed after TSMC's move into Japan took shape in fall 2021. Prefectures now pitch Taiwanese chip firms directly, though the record so far holds one reported plant prospect and no disclosed investment figure.
The Investor · Invest desk
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What happened
- ASE Group, the world's largest chip packaging and testing company, is reported to be considering an entry into Kitakyushu, an industrial city in northern Kyushu.
- Kitakyushu recently sent its first delegation to Hsinchu, home of TSMC's headquarters, to explore industry-academia-research cooperation.
- Gifu Prefecture officials and business leaders visited Taiwan to pitch investment to the Taiwanese government and semiconductor companies.
- Miyagi, home to Tokyo Electron, held its own investment briefing alongside SEMICON Taiwan in Hsinchu last month and set out support measures for incoming firms.
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Why it matters
- constraint With a weak yen making Europe and the US harder to reach and China politically closed, Japanese prefectures are aiming their investment drives at one pool of Taiwanese chip firms.
- cost Prefectures pitching the same Taiwanese firms end up bidding against one another with support packages, and the winning region's budget pays for the most generous offer.
- decision ASE's call on Kitakyushu is the first test of whether the post-2021 courtship yields Taiwanese chip capacity in Japan outside Kumamoto.
Two-thirds of about 180 is about 120 agreements signed since fall 2021 [1], against roughly 60 in all the years before [2]. The jump begins when TSMC's move into Japan took concrete shape [7]. The Japan-Taiwan Exchange Association's tally covers partnership agreements of various kinds between local governments, counted to the end of July this year [6].
The cash in this story, or rather the only cash anyone has committed to a building, sits in Kumamoto, where TSMC built a plant [8]. Nikkei's projection of about 10 trillion yen of economic impact from the cluster there over ten years comes to about 1 trillion yen a year [3]. That figure estimates impact on the region, not spending by TSMC or its suppliers [8]. I'd expect it to sit behind every prefectural pitch now arriving in Taiwan.
Kitakyushu, Gifu and Miyagi are courting the same pool of Taiwanese chip companies [2] [4] [5], and Miyagi has already put support measures on the table [5]. When several sellers chase a few buyers, the buyers set the terms. The cost of landing a plant drifts toward whatever the most generous prefecture offers. ASE is the only company the reporting ties to a specific site [3]. It is the world's largest chip packaging and testing company, so a Kitakyushu entry would add packaging and testing capacity [3]. The report, which Seoul Economic Daily carried from Nikkei, does not give a size, a date or a rival location for ASE's plans [3].
Part of Taiwan's appeal is that the alternatives got harder. A Japanese financial industry official with Taiwan experience told Nikkei that a prolonged period of yen weakness has made Europe and the US relatively harder to approach [9]. Political circumstances have made exchanges with mainland China difficult as well, the official said [9]. Relations between Japan and China show little sign of recovery [1]. In that official's account, Taiwan is the realistic alternative [9].
If ASE commits to Kitakyushu with a disclosed sum, Taiwan-linked chip capacity in Japan spreads beyond Kumamoto [3]. If its interest stays an interest, the delegations add to the 180 agreements without adding plants [6]. A stronger yen or a thaw between Japan and China would ease the two pressures the official described [9] and leave prefectures freer to court Europe, the US or China again. I think the middle outcome is the likeliest for Gifu and Miyagi, since the reporting attaches a named company only to Kitakyushu [3]. A Taiwanese firm naming Gifu or Miyagi for a plant, with a sum attached, would prove that wrong.
What to watch
- An ASE announcement naming Kitakyushu with an investment sum and a timeline.
- The Japan-Taiwan Exchange Association's next count of local agreements, and whether any new one is tied to a company investment in Gifu or Miyagi.
- A sustained yen recovery or a thaw between Japan and China, the two conditions the official said pushed prefectures toward Taiwan.