KUMAMOTO--With the grandeur of Mount Aso in the background, around 20 cranes were erecting what will be a fortress-like building on a 21-hectare site in Kikuyo town, Kumamoto Prefecture.

The area, vacant only a year ago, now carries the hopes, dreams and economic future of not only the town but also the entire prefecture.

The site will be home to a plant for global chip producer Taiwan Semiconductor Manufacturing Co. (TSMC).

The plant is expected to open in 2024, but it is already changing the atmosphere in Kumamoto Prefecture, from real estate and infrastructure to employment and education.

Taro Imamura, chief of the commerce and industry promotion division at the Kikuyo town government, says construction at the site “is moving forward very speedily.”

Around 2,000 workers have gathered from around Japan for three shifts at the site that keep operations running 24 hours a day.

Locals said the work stopped only on New Year’s Day.

ECONOMIC BONANZA FOR PREFECTURE

Kumamoto’s gross prefectural product is just over 6 trillion yen ($44 billion). TSMC’s initial investment in the prefecture is 1 trillion yen, about one-sixth of the economic total.

TSMC’s arrival is also expected to produce an economic ripple effect of more than 4 trillion yen in Kumamoto Prefecture over 10 years.

And there could be more in store for the prefecture from the Taiwanese company.

“We are considering building our second manufacturing plant in Japan,” C.C. Wei, TSMC’s CEO, has said.

Construction workers are not the only ones coming to Kumamoto Prefecture.

In fiscal 2021, a record 59 companies started operating in the prefecture. Twenty-two of them were semiconductor-related companies, more than triple the number of the previous fiscal year.

A senior prefectural government official excitedly said such companies have revived long-dormant industrial zones.

The official said Kumamoto has sold 30 hectares of prefecture-owned industrial plots in the past year, and only 6 such hectares remain available.

The prefectural government is currently developing industrial zones at two sites within the prefecture.

The Kumamoto city government is also trying to secure a 20-hectare industrial park.

TSMC’s move into the prefecture has created a demand for land that surpasses supply.

Kanken Techno Co., a company based in Kyoto Prefecture that manufactures gas purifiers used in semiconductor plants, had to be content with buying the former site of an elementary school in Tamana, Kumamoto Prefecture.

The site is a 40-minute drive from where TSMC’s plant is being built.

“It’s a bit too far, but we had no choice,” Kanken Techno President Keishi Imamura said.

He said his company had looked at seven other places before deciding on the former school site.

Prices of land near the TSMC plant site are skyrocketing.

According to “standard land prices” published by the land ministry in September 2022, prices for industrial real estate in Kikuyo town soared by 31.6 percent, the biggest rise across Japan.

However, Kazuki Goto, chair of the Kikuyo town chamber of commerce and industry, said the price increase is actually higher.

He said people are even buying properties legally categorized as “miscellaneous land,” as well as mountainous or forested areas, at prices three or four times higher than normal.

“Real estate agents are visiting landowners and saying, ‘Please sell us your land at any price,’” Goto said.

One man recently sold a mountainous plot near the TSMC site for around 6 million yen per 1,000 square meters.

He said a similar adjacent plot fetched only about 1.5 million yen for the same size two years ago.

The chair of a local real estate agency said land in the area is now being sold at “imagined prices.”

“Agent after agent offers high prices to landowners, and word spreads. That makes landowners hold onto their properties because they think they will be offered even better prices,” the chair said.

‘KUMAMOTO PROPERTY BUBBLE’

TSMC expects 1,700 employees, including 300 from Taiwan, will work for the company in Kumamoto Prefecture.

However, there are currently not enough rental properties to accommodate them all.

According to Kumamoto-based Kosugi Real Estate Co., Kikuyo town has only around 10 vacant apartments each for families or single people that meet TSMC’s building age conditions of being 10 years old or newer.

The real estate company says the situation is the same in neighboring Ozu town.

Around 30 new apartment buildings are planned in the two towns to ease the housing shortage.

Rent has risen by 10 percent in these areas since last year.

“We have never experienced such a rent rise,” said Ryuzo Kosugi from Kosugi Real Estate. “This is a Kumamoto property bubble.”

NEW SCHOOLS FOR FAMILIES

TSMC has asked the Kumamoto prefectural government to provide support regarding education for the families of the company’s employees.

In December 2021, after TSMC decided the previous month to open the plant in the prefecture, Kumamoto Governor Ikuo Kabashima contacted Michiaki Matsumoto, president of Kyushu Lutheran School, to stress the importance of providing an education environment for children of the company’s employees.

Kyushu Lutheran School operates a junior high school, a high school and a university in Kumamoto.

In response to the governor’s request, the Lutheran school operator decided to provide specialized lessons for children of TSMC employees at its junior and senior high schools, in cooperation with an international school in Tokyo.

The same international school will help the Lutheran school open an international elementary school.

Kumamoto International School, which runs an international elementary school in Kumamoto, has moved forward its plan to open a junior high school and a high school in the prefecture.

It is constructing the school buildings on a newly secured site, and it plans to employ Taiwanese teachers.

The Kumamoto prefectural government has established a new section to help TSMC employees adapt to life in Japan.

Taiwanese employees, for example, will need interpretation services or guidance to deal with administrative procedures or see doctors in Japan.

The new section has enlisted the help of Taiyuu Yukou Kai, a group of Taiwanese residents in Kumamoto, and is considering lending “Pocketalk,” an automatic audio translation device, to TSMC employees.

The Japanese government will pay a grant of up to 476 billion yen for construction of the TSMC plant.

Deepening U.S.-China tensions are behind the government’s move to bring the Taiwanese company to Japan.

Taiwan mass-produces semiconductors for markets around the world.

In light of the global shortage of chips, the U.S. government felt it would be difficult to secure semiconductors in emergencies, so it persuaded TSMC to build a plant in the state of Arizona.

The U.S. government also decided to invest more than $50 billion in the semiconductor industry.

Japan followed suit.

“Just like food and energy, semiconductor chips became an important item in terms of economic security,” an official of Japan’s trade ministry said.

POSSIBLE REVIVAL OF JAPANESE INDUSTRY

Japan accounted for 50 percent of global sales of semiconductors in 1988, but the share plunged to 10 percent by 2019.

Japanese companies in the 2000s withdrew from the semiconductor market because of the huge costs needed to develop the chips and build the necessary infrastructure.

TSMC filled the void left by the Japanese companies and became a global giant by manufacturing chips for smartphones.

Tadahiro Kuroda, an engineering professor at the graduate school of the University of Tokyo, has been studying the theme of resurrecting Japan’s semiconductor industry.

He said advanced semiconductor technologies will be crucial in the future, particularly for autonomous driving and robotics, and an era will come where physical space and virtual space are merged.

TSMC’s arrival in Japan is good because it “will make possible domestic mass-production of semiconductors, which has been a weak point of Japanese industries,” Kuroda said.

“The United States used to be hostile toward Japan when trade friction over semiconductors broke out between the two countries (in the 1980s and 1990s),” he continued. “But now, the U.S.-China conflict has changed the situation. The weaker yen is a favorable trend for the Japanese semiconductor industry, too.”

Sony Corp. has a plant near the TSMC site in Kumamoto.

In addition, Toyota Motor Corp. runs a factory in neighboring Fukuoka Prefecture.

Although large Japanese semiconductor producers have gone bankrupt or were sold to other companies, Japan retains the “soil” to manufacture semiconductor-related materials or equipment, the professor said.

This foundation could later be used to revive the nation’s semiconductor industry.

“I now believe that a new ‘forest’ can be reborn from the soil,” Kuroda said.

(This article was written by Satoko Onuki, Shomei Nagatsuma, and Yasuaki Oshika.)