Japan is looking to offer 1.49 trillion yen ($10 billion) in subsidies for Taiwan Semiconductor Manufacturing (NYSE:TSM) and Rapidus, Bloomberg reported.
According to the report, Yoshihiro Seki, secretary general of the Liberal Democratic Party’s legislative coalition on semiconductors, estimates up to 900 billion yen would be set aside for a second TSM factory in Kumamoto in southwest Japan. Additionally, the legislator said 590 billion yen would be designated for Japan’s domestic chip venture Rapidus Corp.
Before the Bloomberg report, local media outlets reported the financial details of the subsidies earlier this month. Per the report, the final figures may still change through discussions with the finance ministry. Nevertheless, the second TSMC factory is projected to cost around 2 trillion yen and will produce 6 -12 nanometer logic chips, which will be utilized in products such as electric vehicles.
Furthermore, the legislator said the Japanese government plans to lobby for additional incentives from the company to justify the higher-than-usual subsidy. This might entail TSMC educating Japanese engineers and undertaking cooperative research with Japanese companies.
According to Seki, subsidies typically cover around one-third of the cost for these kinds of projects. With 900 billion yen, the government will pay far more than one-third of the new TSMC plant’s expenses.
With up to 476 billion yen in subsidies, Japan is already covering approximately half of the cost of the first TSMC facility in Kumamoto. The government has also committed 330 billion yen to Rapidus, which plans to manufacture 2 nanometer logic chips in northern Hokkaido.
What is the Future of TSM Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSM stock based on six Buys assigned in the past three months, as indicated by the graphic above. Furthermore, the average TSM price target of $122.50 per share implies 38.92% upside potential.
