TSMC Plans $17 Billion Japan Expansion With Advanced 3nm Chips As Tokyo Ramps Up Subsidies

Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is reportedly preparing a major expansion in Japan.

TSMC Eyes Advanced 3nm Chip Production In Japan

TSMC plans to mass-produce advanced 3-nanometer chips at its facilities in Kumamoto, southern Japan, with total investment expected to reach about $17 billion, reported Japanese newspaper Yomiuri on Thursday.

The move would mark a significant upgrade from TSMC's earlier plans for more mature chip technologies in the region.

Japan's government, which has already provided substantial subsidies to support TSMC's expansion in Kyushu, is considering additional financial backing for the new plan, the report said.

Shift From Legacy Nodes Signals Strategic Upgrade

Previously, TSMC had planned to invest roughly $12.2 billion in its second Kyushu fab to produce 6- to 12-nanometer chips.

The company is now expected to discuss revisions to that plan with Japanese authorities.

In October 2025, it was reported that TSMC's Japan unit, Japan Advanced Semiconductor Manufacturing, began construction of a second wafer fabrication plant in Kumamoto under a separate $13.9 billion investment plan.

That facility is expected to produce 6-nanometer chips for applications such as autonomous vehicles and AI, with production slated to begin by late 2027.

Japan Balances TSMC Expansion With Rapidus Push

Japan is also heavily subsidizing Rapidus, a domestic foundry venture aiming to produce next-generation chips in Hokkaido.

The government has determined that TSMC and Rapidus will serve different markets and use cases, limiting direct competition, the report noted.

TSMC did not immediately respond to Benzinga’s request for comments.

Strong AI Demand Fuels TSMC's Global Expansion

TSMC's expansion plans come as the company continues to benefit from surging AI-driven demand.

In January 2026, the chipmaker reported quarterly revenue of $33.73 billion, up more than 20% year over year, beating analyst expectations.

TSMC is a critical manufacturing partner for companies such as Nvidia Corp. (NASDAQ:NVDA), which relies on TSMC for its GPUs and Apple Inc. (NASDAQ:AAPL), which depends on the chipmaker for its iPhone processors.

Price Action: Shares of TSMC closed down 2.98% at $325.74 on Wednesday and rose 1% to $328.99 in after-hours trading, according to Benzinga Pro.

TSMC shows solid price trend across the short, medium and long-term horizons, though it carries a weak valuation score, according to Benzinga Edge Stock Rankings.

Photo: Jack Hong / Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.