tech

TSMC offers a starting salary of 280,000 yen per month to Japanese university graduates, which is 40% higher than the local average of about 200,000 yen.

TSMC's first wafer fab in Japan will officially open on February 24th, with mass production expected by the end of 2024.

TSMC's subsidiary, Japan Advanced Semiconductor Manufacturing (JASM), began construction in 2022, and the factory is expected to directly create about 1,500 high-tech professional jobs, with a monthly production capacity of 45,000 12-inch wafers. With strong support from the Japanese government, the initial capital expenditure is estimated to be around 7 billion US dollars.

According to Japanese media reports, the number of employees during operation is estimated to reach 1,700, and it is estimated that the Kumamoto region will generate an economic benefit of 6.9 trillion yen over the next decade, thanks to TSMC's presence.

The wafer fab began construction in April 2022, the main structure of the building has been completed, and some office areas were also put into use in August this year. It will produce N28 28nm process chips, which is the most advanced semiconductor process in Japan at present. The 22ULP process will also be produced here, but note that it is not 22nm, but a variant of 28nm, specifically for ultra-low power devices.

Advertisement

This process is obviously not enough for high-performance CPUs, GPUs, and SoCs, but it is sufficient for chips in the automotive and consumer electronics fields, and there is also a large market demand for this part. In Japan, there are many enterprises that are still using such chips. Given the long life cycle of many integrated circuits (ICs), these technologies are expected to remain relevant for a long time.

After the wafer fab is fully operational, it will create about 1,700 jobs, and there are already about 1,400 employees, with an additional 250 people expected to join in the spring of this year.

Japanese media reports that TSMC's senior management is expected to attend the opening ceremony in February next year, and the construction of a second factory is also being considered in the future. The manufacturing process will be upgraded to the N16 level, including different versions such as N16, N12, and N12e.

TSMC's Japanese factory offers attractive salaries.TSMC (Taiwan Semiconductor Manufacturing Company) might inject fresh impetus into wage increases, with a rise that could outpace the inflation-plagued price increases in Japan, a fundamental element long sought by Japanese Prime Minister Fumio Kishida.

Economists say that TSMC's generous compensation package for building a new factory in Kikuyo Town, Kumamoto Prefecture, on Kyushu Island, could serve as a wake-up call not only for manufacturers in the region but also for those in other parts of the country. If wage increases continue to lag behind price increases, the world's third-largest economy faces the risk of stagflation, with spillover effects being crucial.

"The tailwind is blowing," said Kazuma Kishikawa, an economist at the Daiwa Institute of Research. He stated that the company's $8.6 billion factory, along with other substantial spending plans by peers such as Rapidus and Micron Technology, could stimulate more investment and talent competition, thereby promoting labor market mobility and wage growth in a broader range of industries.

The Japanese government is preparing to help the semiconductor industry achieve its goal of doubling domestic sales of chips, components, and materials to 15 trillion yen ($105 billion) by 2030 through financial assistance, while also seeking to encourage companies to increase capital expenditure credits through tax incentives. Japan considers domestic chip production vital to its economic security.

According to the Japanese Trade Union Confederation, about 5,300 unionized workers agreed to an average management pay raise of 3.58% in the 2023 wage negotiations, the largest increase in about 30 years. Despite this, real wages have fallen for the 19th consecutive month in October, adjusted for inflation, as wage growth has failed to keep up with rising prices.

With subsidies of up to 476 billion yen, TSMC plans to hire 1,700 workers and start production at the factory in December 2024.

Local university officials say that TSMC offered a starting salary of 280,000 yen per month to 2022 university graduates, 40% higher than the local average of about 200,000 yen. Data from the Sanro Research Institute shows that this figure is also 27% higher than the national average monthly salary of about 220,000 yen for new graduates in the year ending March 2024.

"I am thrilled to start my semiconductor career at the (TSMC) factory. I can absorb the world's most advanced skills and knowledge there, and receive a good salary and benefits," said a 19-year-old student from Kumamoto Prefectural Institute of Technology, a two-year college in Kikuyo. He will start his career as a deputy engineer at TSMC's Kumamoto factory in April, with a monthly salary of about 230,000 yen.

As Japan faces a shrinking labor force, local companies are striving to ensure a sufficient workforce around Kikuyo. Kikuyo is a small town with a population of about 44,000, where TSMC and its suppliers have gathered in an industrial park to create a semiconductor-related business cluster.

Economists anticipate that competition for talent and wages will intensify nationwide. In the semiconductor industry, newly established chipmaker Rapidus is building a new semiconductor factory in Hokkaido, and U.S. chip giant Micron Technology is increasing capacity in Hiroshima Prefecture, with both companies receiving subsidy support of about 200 to 300 billion yen.Toshiba and Kioxia are also increasing production lines. TSMC is considering establishing a second factory in Japan, reportedly planning a third one, and receiving more government financial support.

"Given that TSMC is recruiting employees nationwide, the trend of rising wages may spread across the country, and small and medium-sized enterprises that cannot keep up with the wage increases will feel the pain," said TSMC's Chief Representative, Toshihiro Nagahama.

The Japan Electronics and Information Technology Industries Association estimates that over the next decade, just eight major domestic chip manufacturers will face a shortage of 40,000 workers.

As more chip-related companies build factories around Kikuyo and abroad, the Kyushu Financial Group estimates that the semiconductor industry cluster in Kyushu (comprising Kumamoto Prefecture and seven other prefectures) will bring about 7 trillion yen in economic impact to the region over the next 10 years starting from 2022. Despite the difficulty for small companies to raise wages, economists say they must offer competitive salaries to attract young talent.