[Chip Talk] Why TSMC Is Rushing to Expand Kumamoto Plant... Massive Volcanic Basalt Water

TSMC "Second Plant Construction to Start Within the Year"
Volcanic Rock Acts as Groundwater Filter

[Image source=AP Yonhap News]

The world's largest foundry (semiconductor contract manufacturing) company, TSMC, recently held an opening ceremony for its first factory in Japan, Kumamoto Plant 1, and it is reported that Plant 2 will also begin construction within this year, drawing attention to the background of this development. Completing the establishment of a semiconductor factory, which typically takes more than five years, in just 20 months and immediately moving on to expansion has led to expectations that TSMC will continue to expand its factories in Kumamoto.

TSMC's rapid expansion is analyzed as a strategic move to quickly secure Kumamoto's volcanic bedrock water, which is advantageous for producing ultrapure water, supported strongly by the Japanese government's institutional backing. As extreme weather events intensify worldwide, the battle to secure ultrapure water, an essential element for the semiconductor industry, is escalating. This strategy aims to claim water resources before other competing companies flood in. The Kumamoto local government is actively promoting the entire region as the "Land of Water" and is pushing various projects to secure groundwater, actively attracting the semiconductor industry.

Right after the opening ceremony of TSMC Kumamoto Plant 1, "Plant 2 to start construction within this year"

According to the Nihon Keizai Shimbun (Nikkei), TSMC held the opening ceremony for its first local factory in Kikuyo Town, Kumamoto Prefecture, Japan, on the 24th of last month and announced that Plant 2 will begin construction within this year. TSMC stated, "Starting from the end of this year, Plant 1 will mass-produce 12 to 28-nanometer semiconductors, and simultaneously, Plant 2, which will produce 6-nanometer semiconductors, will begin construction." They added, "Mass production at Plant 2 is scheduled to start in 2027, and the construction of Plant 3 is also under consideration."

Completing the construction of Plant 1 in just 20 months and immediately starting semiconductor mass production, followed by beginning construction of Plant 2 within the year, is an exceptionally rapid pace. Kashima Construction, Japan's leading general construction company responsible for building TSMC Kumamoto Plant 1, carried out 24-hour, three-shift continuous work to build the factory swiftly. Plants 2 and 3 are also expected to proceed at an incredible speed.

Through this expansion, TSMC is expected to firmly establish Kumamoto as its second base and further increase its semiconductor market share. On the 26th of last month, market research firm TrendForce predicted, "TSMC's revenue share, which was 59% last year, will increase to 62% this year, and accordingly, the combined revenue share of Taiwanese companies will rise from 67% to 70%."

Kumamoto's volcanic bedrock water, the ‘Land of Water’... advantageous for ultrapure water production

[Image source=EPA Yonhap News]

TSMC's unusual expansion of the Kumamoto plant appears to be driven not only by the geopolitical disputes between the United States and China surrounding the Taiwan Strait but also by a strategy to quickly secure Kumamoto's water resources.

Japanese local media TV Asahi reported, "One of the biggest reasons TSMC chose Kumamoto as the factory site is the clean and abundant underground bedrock water," adding, "Kumamoto is covered entirely by volcanic clastic rocks, and as river water seeps underground, dust and impurities are naturally filtered out. This makes it advantageous for producing ultrapure water."

Hiromi Suzuki, a specially appointed professor at Kumamoto University's Faculty of Engineering, told TV Asahi, "To manufacture semiconductors with over 4,000 microscopic components fitting within the width of a single hair, a large amount of ultrapure water is required." He explained, "Ultrapure water allows only impurities equivalent to a drop of sweat in the volume of water contained in 100 six-story buildings. Kumamoto holds particularly clean groundwater in large quantities, making ultrapure water production easier."

In fact, ultrapure water refers to highly refined water that removes all minerals, particles, bacteria, microorganisms, and dissolved gases remaining even in clean water. Because semiconductors are produced at such a microscopic scale, many ultrapure water cleaning processes are necessary. Ultrapure water is especially needed to wash away debris left after wafer etching processes or to remove gases generated during byproduct formation.

Advanced semiconductors, which handle nanometer-scale ultra-fine processes, can suffer fatal errors from tiny particles remaining before and after each process. Therefore, cleaning with ultrapure water is essential not only to maintain cleanliness but also to improve semiconductor productivity and yield.

Kumamoto moves to secure large amounts of groundwater aiming to become a ‘Silicon Island’

[Image source=AFP Yonhap News]

Not only the Japanese government but also the Kumamoto local authorities emphasize the importance of this groundwater and are conducting various projects to increase its quantity. One representative water resource conservation policy is the so-called "groundwater recharge," which involves continuously supplying river water to rice paddies during the off-season so that water naturally seeps underground.

Yasunori Kawagoe, a professor at Kumamoto University's Water Circulation Education Center, explained, "Groundwater recharge involves diverting water from rivers to rice paddies to allow it to infiltrate underground," adding, "The soil in Kumamoto, where TSMC's factory is located, consists mainly of Aso volcanic sediment deposits that allow water to permeate well, and this natural filter cleans the water."

The collected groundwater can be preserved for a long time, unlike surface water affected by droughts or floods, and its quality remains stable as it is continuously replenished by rain. The Kumamoto local government is drawing water from the nearby Shirakawa River to continuously increase groundwater, and since the groundwater recharge policy began in 2005, groundwater volume has been steadily increasing.

In contrast, Taiwan, where TSMC's headquarters are located, is facing worsening water shortages. In 2021, Taiwan experienced a severe drought for the first time in 56 years, causing significant difficulties such as temporarily cutting off agricultural water supply around the Hsinchu Science Park in northern Taiwan, where TSMC is located, to secure industrial water.