TSMC will build 3nm chips in Japan and increase investment to $17 billion.

TSMC is now planning to build 3-nanometer chips in Japan, raising the stakes in its international expansion just as Japan pushes to bring chipmaking back home.

The second plant, to be built in Kumamoto, was originally meant to produce older 7nm chips by late 2027. But now, the company wants to go straight to 3nm, the same level it uses to supply Apple and Nvidia. That also means a bigger bill: ¥2.6 trillion, or $17 billion, according to a report by Yomiuri on Thursday.

This project is a major piece of Prime Minister Takaichi Sanae’s plan to restore Japan’s tech edge, as her government has been pumping more cash into semiconductors and AI. The industry ministry’s proposed budget for next fiscal year is set to hit ¥1.23 trillion, almost four times higher than before.

Takaichi has met with TSMC CEO C. C. Wei in Tokyo and called the deal “a win-win partnership” for Japan’s economic security and global chip stability.

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Wei thanked the Japanese government during that same meeting. “Without your support this giga-fab project won’t be possible,” he said, pointing out that TSMC’s new base would also support Japan’s push into artificial intelligence.

The announcement comes right before a snap lower-house election on February 8, set by Takaichi to lock in support while her popularity remains high. She’s only been in the top job for about three months.

The deal isn’t fully locked in yet. Several people close to the talks said the plan is still in early stages and could shift.

But even without final terms, this already sends a message: TSMC is moving fast. The company is scrambling to meet global demand for AI chips, especially as more countries start to question their dependence on Taiwan.

Omdia analyst Akira Minamikawa said the decision likely reflects how fast demand is rising, and how Japan could eventually host even more advanced chip production.“This could lead to discussions about producing even more advanced nodes in Japan in the future,” he said.

It’s also a move that reduces risk. Taiwan’s tight electricity supply and land limits are becoming real issues. So is the island’s growing tension with China.

While TSMC has said it’ll keep the most cutting-edge tools at home, it’s now clear they’re willing to send mature chipmaking overseas. It’s already producing 2nm chips in Kaohsiung, Taiwan, as of last quarter. But the overseas sites, like this Japanese plant, help ease the load, and quiet governments who don’t want all their chips coming from Taiwan.

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