Taiwan Semiconductor Manufacturing Co. (TSMC), the leading contract chip manufacturer, has announced its intention to set up a new production facility in Japan with support from Sony and Toyota. This move is drive by growing customer demand and aligns with Japan’s push to regain a position in the semiconductor industry.

The upcoming factory, to be built by Japan Advanced Semiconductor Manufacturing Inc. (JASM), a TSMC-owned subsidiary, is set to start operations by the end of 2027. This expansion comes after a facility expected to be operational this year. The total investment in JASM for both facilities, funded by venture partners, will surpass $20 billion.

While these plants won’t focus on cutting-edge production, they will specialize in applications for semiconductors, industrial uses, consumer electronics, and high-performance computing.

TSMC, renowned for manufacturing semiconductors for companies such as Apple and Nvidia holds an 86.5 percent ownership stake in the factory. Sony owns 6 percent of shares, DENSO has a 5.5 percent stake, and Toyota has a share of 2 percent.

Investing further in Japan indicates the country’s growing importance in the semiconductor industry. Japan announced plans year to increase spending on semiconductor equipment with a focus on allocating $7 billion for wafer fabrication plant equipment by 2024.

After completing the fab, TSMCs Kumamoto facility is expected to produce over 100,000 12-inch wafers monthly using various process technologies for different applications. This increased production capacity aims to improve cost efficiently and streamline supply chain operations for JAMS creating than 3,400 high tech jobs.

The establishment of these two factories aligns with TSMCs strategy for expansion, which includes a $40 billion investment, in Arizona to build two chip manufacturing plants as part of broader efforts to boost domestic manufacturing in the US.