Japanese Chip Material Makers Expand US Production to Supply TSMC's Arizona Plant

Japanese chip material makers are increasing their production in Arizona to support Taiwan Semiconductor Manufacturing Co.'s (TSMC) new plant, a trend that could accelerate if President Donald Trump imposes tariffs, Nikkei Asia reports.

The move is driven by the influx of advanced chipmaking facilities to Arizona, spurred by significant subsidies introduced under former President Joe Biden. TSMC's investment in a new factory in the state is a prime example. The area's existing infrastructure, including a US military base, a strong presence in the defense and electronics industries, ample groundwater, and nuclear power plants capable of supplying the substantial electricity demands of chip manufacturing, has further attracted the industry.

JX Advanced Metals, a major player in the global sputtering target market, has invested approximately 18 billion yen ($116 million) in a new plant in Mesa, Arizona. This facility will nearly double the company's US supply capacity of sputtering targets, a crucial component in semiconductor production.

"It's also a base for obtaining information," said Takeshi Suwabe, general manager of JX Advanced Metals' thin film materials division, to Nikkei Asia, highlighting the strategic importance of the US expansion. The company aims to gain insights into future material demands through close interaction with its customers.

Other Japanese companies are following suit. Mitsubishi Gas Chemical will more than double its production capacity of super-pure hydrogen peroxide and more than triple the capacity of super-pure ammonium hydroxide, essential chemicals used in chip manufacturing, at its Arizona facility.

Organo, a Japanese company specializing in high-purity water for semiconductor manufacturing, established its first US sales base in 2021, while Merck, a German company, has invested $28 million to expand production and research and development in Arizona.

Trump's recent criticism of Biden's chip investment incentives, and his suggestion that tariffs could have been a more effective tool, introduces uncertainty. While tariffs could potentially reduce demand for related materials, they could also incentivize further domestic production.

Many Japanese companies prioritize producing cutting-edge chip materials within Japan to prevent technology leaks. However, Trump's policies may force a shift towards greater US-based production.