Japan Viewpoint - Manufacturing agglomeration set to boost logistics demand

The evolution of the manufacturing industry is set to emerge as the next driver of logistics demand

Recent years have seen supply chain disruption caused by the COVID-19 pandemic and rising geopolitical risks force manufacturers around the world to recalibrate their production and logistics networks.

Amid this global shift, one project that has attracted particular attention is the launch of a manufacturing plant in Japan by the major semiconductor contract manufacturing and design firm, Taiwan Semiconductor Manufacturing Company Limited (TSMC).

The plant is being built by Japan Advanced Semiconductor Manufacturing (JASM), a joint venture formed by TSMC, the Sony Group and Denso Corp., in Kikuyo, Kumamoto Prefecture. Construction is due for completion in 2023, with the production of logic semiconductors used in automobiles and image sensors slated to begin by 2024. TSMC has also announced its intention to consider developing a second plant in Japan. The company’s entry into the market is expected to revitalise the Japanese semiconductor industry while stimulating the broader manufacturing sector.

This report explores the anticipated impact of TSMC’s new manufacturing plant on the local economy in Kumamoto and on demand for logistics facilities. While demand for logistics facilities in Japan has historically been centred on the need to transport consumer goods in major metropolitan areas, the evolution of the manufacturing industry is set to emerge as a major driver of demand across the country, alongside e-commerce growth.