Taiwan TSMC’s New Chip Plant Drives Up Land Prices in Kumamoto

In April 2022, Taiwan Semiconductor Manufacturing Company (“TSMC”), one of the world’s largest semiconductor manufacturers, started the construction of its new chip plant located in Kikuyo-machi, Kumamoto, Japan. The new chip plant is for wafer Fab 23 and will be run by a joint venture with Sony and Denso. The investment in the new plant is approximately US$8.6 billion (about JPY 1,150 billion), including a Japanese government subsidy of JPY 476 billion. The construction is expected to be completed in September 2023 and the mass production is expected to start by the end of 2024. As the news of TSMC’s new chip plant setup starting to spread in mid-2021, land prices of Kumamoto Kikuyo-machi have begun to rise with expectations that TSMC’s presence will bring huge economic benefits to Kumamoto.

Kumamoto Kikuyo-machi’s Land Price Increased 12% YoY, the Highest Increase Rate in Kumamoto

According to the benchmark land price data released in September 2022, the average land price in Kikuyo-machi, Kumamoto, rose by approximately 12% year-on-year, the highest rate of increase in Kumamoto. Land prices in Kikuyo jumped by 32% for industrial land use, 14% for commercial land use and 7.7% for residential land use. Ozu-machi and Koshi-shi, both of which are located near Kikuyo-machi, also recorded year-on-year increases of around 9% and 6% respectively.

TSMC’s Presence Will Boost Demand for Industrial Land and Population Growth in Kumamoto

TSMC’s new plant is expected to generate JPY 4,300 billion (about US$32 billion) in economic benefits for Kumamoto Prefecture over 10 years from 2022, equivalent to about 70% of Kumamoto’s total GDP in 2019 before the outbreak of COVID-19. TSMC will recruit about 1,700 employees at the new plant, including 320 from Taiwan, 200 from Sony Japan, and 1,200 from new hiring. In addition, The need for semiconductor-related companies to set up plants in the vicinity, as well as the need for logistics companies to set up warehouses, will potentially further boost demand for industrial land and housing for employees. According to Nikkei, Sony, which uses TSMC’s semiconductors in its mobile phone image sensors, is planning to invest approximately JPY 800 billion to set up a plant nearby, expected to be completed in 2023 and commence production in 2024.

However, the land supply in Kikuyo-machi is very limited as about half of the land in Kikuyo-machi is subject to development restrictions, and most of the developable agricultural land and vacant land has already been traded. Therefore, the demand for land will likely expand to the neighbouring areas such as Ozu-machi, Koshi-shi, Kikuchi-shi, and Kumamoto-shi.

Meanwhile, the Taiwan China Trust Group and Fukuoka Financial Group announced the partnership agreement in December 2022 to jointly provide cross-border financial services for their clients through Taiwan China Trust Bank, Fukuoka Financial Group’s subsidiaries including Fukuoka Bank, Kumamoto Bank and Juhachi Shinwa Bank. Services include opening deposit accounts in Taiwan, borrowing in local currency, providing information on the economic integration, investment environment and market conditions, as well as business matchmaking. The two Groups are also planning to hold seminars in Kumamoto on business practices and culture in Taiwan and panel discussions on promoting the semiconductor industry and human resources development. It is foreseeable that not only will the performance of TSMC’s new plant attract attention, but also the development of economic integration between the overall Kyushu area of Japan and Taiwan.

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