According to reports, Taiwan chipmaker Powerchip Semiconductor Manufacturing Corp is examining five locations in Japan, including Mie prefecture, for a potential $5.4 billion facility as subsidy talks proceed. In July, Powerchip formed a joint venture with Japanese banking firm SBI Holdings with the goal of obtaining government subsidies to develop a facility in Japan.

Those negotiations are moving forward as per sources who declined to be identified because the information is not public. According to one source, the entire cost of the factory will be around 800 billion yen ($5.35 billion), with Powerchip seeking subsidies to pay a portion of the cost of the first phase.

Powerchip is looking at around five sites for the factory, the source said. One option is Mie prefecture in central Japan, two sources said, close to the industrial hub of Nagoya and fabs operated by Taiwan's UMC and Japan's Kioxia. Powerchip did not respond to requests for comment.

According to an SBI representative, conversations with the Japanese government are ongoing, and a formal application for subsidies for the 420 billion yen first phase is planned. Japan is attempting to revitalize its chip sector, which retains a competitive advantage in materials and equipment but has lost its manufacturing primacy by providing subsidies to domestic and international chipmakers.

Powerchip's factory would be a further commitment by Taiwanese chipmakers to manufacture in Japan, with TSMC already establishing a factory in Kyushu, western Japan, and considering a second.