Japanese media shockingly reports that TSMC Kumamoto Plant 2 has halted operations! It may switch to 4nm process technology to meet AI demand.

Nikkan News reports that TSMC (TSMC)'s second wafer fabrication plant located in Kikuyo Town, Kumamoto Prefecture, Japan, has now entered an actual shutdown state. The plant was originally scheduled to break ground in October 2025 and commence production in 2027, but as of early December, construction sites have been fully halted. It is understood that due to the global growth of pure electric vehicle sales not meeting expectations, the capacity utilization of the first plant producing automotive semiconductors has fallen below forecasts. TSMC is considering converting the second plant to adopt 4-nanometer advanced processes to cope with the rapidly increasing demand for AI semiconductors.

Slowing electric vehicle demand leads to underperformance of Kumamoto Plant 1’s capacity utilization

By the end of 2024, TSMC’s first manufacturing base in Japan, Kumamoto Plant 1, has begun producing 12~28nm products suitable for automotive semiconductors. The main reason for the shutdown of the second plant is that TSMC is reevaluating the production line planning for Kumamoto Plant 2. The original plan was for this plant to produce chips using 6 to 40-nanometer processes, covering applications like communication equipment. However, with the rapid rise in global AI semiconductor demand, TSMC is considering switching to implement 4-nanometer advanced processes to support mainstream AI chip production.

Additionally, the global growth of pure electric vehicles (EVs) has not met expectations, dragging down the overall recovery of the semiconductor market, which has also caused the capacity utilization of Kumamoto Plant 1, scheduled to start production at the end of 2024, to fall short of initial expectations. Amidst changing demand structures and increased market uncertainties, TSMC has chosen to delay the second plant’s construction to adjust its mid- to long-term process and product deployment.

If Kumamoto Plant 2 switches to 4-nanometer technology, it will enhance the stability of AI chip supply within Japan

Should Kumamoto Plant 2 ultimately shift to 4-nanometer manufacturing, it would be more advantageous for producing AI semiconductors that require finer process technologies, and help improve the stability of AI chip supply domestically in Japan. In addition to front-end wafer manufacturing, TSMC is also evaluating the introduction of AI semiconductor packaging and assembly processes locally to further improve the supply chain.

However, related adjustments may also delay the original scheduled production start in 2027. TSMC responded that its investment plans in Japan are still ongoing, and it is currently negotiating construction details and implementation plans with partners. Whether to officially adjust the schedule will still depend on the assessment of domestic AI semiconductor demand in Japan.

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