Japan has announced plans to provide TSMC with up to 732 billion yen ($4.86 billion) in subsidies for constructing a second chip fabrication plant.

This decision follows the opening of TSMC’s first Japanese factory. TSMC’s move to build chips in Japan aligns with Tokyo’s efforts to bolster advanced semiconductor manufacturing and fortify industrial supply chains amid escalating tensions with China.

Minister of Economy, Trade and Industry Ken Saito emphasized the significance of the new plant, stating that it will produce more advanced chips suitable for AI and autonomous driving, ensuring a stable semiconductor supply for Japan.

This additional financial support and previous subsidies for TSMC’s first factory could exceed 1 trillion yen in taxpayer-funded assistance.

TSMC, already expanding in the US and Germany aims to commence mass production in Japan by the year’s end. The total investment for this venture, including the second plant, will surpass $20 billion.

Upon completion, the combined monthly capacity of the two factories will exceed 100,000 12-inch wafers, meeting the demand from technology firms and automakers like Sony and Toyota Motor.