In order to tackle financial challenges, Taiwan’s Powerchip Semiconductor has dropped Japan’s chip plant plans, pivoting to a collaboration with Tata Group’s fab in Gujarat, India.
Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) has reportedly abandoned its plans for a chip plant in Japan, redirecting its focus to a technology partnership in India. This shift aims to alleviate the company’s financial pressures, according to Nikkei Asia.
PSMC recently informed Japan’s SBI Holding that it is unwilling to take on the risks associated with the proposed facility in Miyagi prefecture, leading to the dissolution of their partnership.
The company’s announcement follows a deal by Tata Group to provide technology for a chip manufacturing facility established in Dholera, Gujarat, India. This partnership fits PSMC’s plan as it faces operating losses from too many older chips in the market, worsened by competition from Chinese companies.
Production at the Miyagi plant was anticipated to begin in 2027, primarily targeting automotive semiconductors, an area expected to grow with the rise of electric vehicles. The total investment for the project was estimated at 800 billion yen ($5.6 billion), with potential government support of up to 140 billion yen.
PSMC clarified that its involvement in the Miyagi project was limited to providing technology and never intended to invest directly in the facility. A key obstacle was the Japanese government’s requirement for mass production guarantees over ten years, which PSMC deemed incompatible with Taiwanese law.
Meanwhile, SBI Holding aims to continue with plans for the Miyagi chip plant, seeking a new partner to develop the region into a semiconductor hub. Despite its limited experience in the semiconductor sector, SBI is also looking to establish back-end production facilities for chip packaging and testing and data centres for artificial intelligence.
In contrast, PSMC is actively pursuing overseas expansion. The agreement with Tata Electronics marks a significant step, as the Gujarat plant will be the first in India to utilise 300-millimeter-diameter wafers, producing legacy chips for applications like power management and displays. The plant is expected to generate a monthly production capacity of 50,000 units and create over 20,000 jobs.
On September 26, Prime Minister Narendra Modi met with the leadership team of this project from Tata Group and PSMC. As the meeting was on sharing updates on semiconductor fabrication projects, PM Modi highlighted in X, “PSMC expressed enthusiasm to further expand its footprint in India.”
Investment in the Gujarat facility could reach up to 910 billion rupees ($10.9 billion), with Tata responsible for construction and operations while PSMC provides production technology. The Indian government has recently approved multiple semiconductor projects, including this partnership, which aims to position Tata as a leader in semiconductor manufacturing within India.
