TSMC suspends new factory in Japan factory due to traffic jams; tells government, 'we'll delay the construction until ...'

Taiwan Semiconductor Manufacturing Co. (TSMC) CEO CC Wei attributed delays in expanding its operations in southwestern Japan to worsening traffic congestion. According to a report in Bloomberg, Wei confirmed that the construction of a second plant in Japan is facing minor delays. While TSMC has primarily operated from Taiwan, it established its first Japanese factory after receiving significant incentives from Tokyo.

The first TSMC plant in Japan, operational since last year, has boosted the local economy but strained the rural infrastructure, leading to housing and service shortages and extended commute times. “We have created too big an impact on the local traffic. I have experienced that in person. For what used to take a 10-15 min drive, it now takes almost an hour,” Wei told reporters after a shareholders’ meeting in Hsinchu, Taiwan, on Tuesday, as quoted by Bloomberg. He added, “We told the Japanese government we’ll delay the construction until the traffic improves. They said they’ll make improvements as soon as possible.”

Wei did not specify the duration of the delay, describing it as minor.

As the world’s leading contract chipmaker, TSMC is central to the global tech supply chain, producing advanced chips for Apple’s iPhones and Nvidia’s AI servers. Governments worldwide, from the U.S. to Europe, have sought TSMC’s investment, especially after pandemic-era chip shortages disrupted production across industries like automotive and consumer electronics.

TSMC says worried about local residents
The planned second factory in Kumamoto Prefecture, initially expected to begin construction in early 2025, is critical to Japan’s goal of revitalizing its semiconductor industry and attracting talent to an aging nation. However, the local infrastructure has struggled to accommodate the influx of workers from TSMC’s first plant, even as the company’s U.S. expansion reduces pressure on Japanese production. “This will become negative for the area, for the local government, but I am most worried it will become negative for local residents,” Wei reportedly said. “So we told the Japanese government to improve the traffic first.”

Japan’s chief government spokesman, Yoshimasa Hayashi, responded, stating, “Heightened uncertainty in the global economy, along with challenges including the lack of domestic infrastructure and labor can lead to hesitation among private companies thinking of investing,” according to Bloomberg. He emphasized Tokyo’s commitment to improving conditions to attract foreign investment and talent.
The delay in Japan echoes earlier challenges TSMC faced in launching its U.S. facilities in Arizona, though progress has since been made. On Tuesday, TSMC executives noted that demand for AI chips continues to outpace supply. Wei reiterated the company’s April forecast of mid-20% revenue growth for 2025, despite margin pressures from a strengthening Taiwanese dollar. TSMC expects record profits this year.