Before the year is out, TSMC, which is also growing in the US and Germany, intends to increase to mass production in Japan.

As TSMC celebrated the opening of its first Japanese factory on Saturday, Japan announced that it will provide up to 732 billion yen ($4.86 billion) in additional subsidies to support the construction of a second chip fabrication plant.

Tokyo's efforts to resurrect advanced semiconductor manufacturing and strengthen its industrial supply chains against disruptions, in light of growing tensions with China, have been greatly aided by TSMC's decision to manufacture chips in Japan.

The first factory in Kumamoto, Japan's Kyushu island, was opened with a ceremony presided over by Morris Chang, the founder of TSMC. "The chips will be more advanced than the first factory and can be used for AI and autonomous driving, and will ensure we have a stable supply of semiconductors in Japan," Minister of Economy, Trade and Industry Ken Saito told reporters afterward.

The most recent financial pledge could push TSMC's taxpayer-funded subsidies above 1 trillion yen. This is because it will supplement the funds already provided to the largest chipmaker in the world for its first factory.

Before the year ends, TSMC, which is also growing in the US and Germany, intends to increase to mass production in Japan. The Taiwanese company claims that over $20 billion will be invested in the venture overall, including a second plant.

After both plants are finished, TSMC can produce more than 100,000 12-inch wafers per month, which it will sell to tech companies and automakers like Sony and Toyota.

A domestic chip company called Rapidus is receiving funding from Japan as well. It is collaborating with IBM and Imec, a European chip research organization, to mass produce advanced chips on the northern island of Hokkaido starting in 2027.