June 11 (UPI) -- Taiwanese semiconductor giant TSMC is reviewing plans to build a plant in Japan's Kumamoto Prefecture, according to a Japanese press report.
The Nikkei reported Friday that the plant would manufacture 12-inch wafers, the semiconductor material used in electronics to make integrated circuits.
Industry sources who spoke on the condition of anonymity to the Nikkei said that the Japanese government had requested TSMC to build a plant in Japan. No final decision has been reached, however.
"TSMC is considering a proposal by the Japanese government to build an advanced chip factory in Japan, though it has not yet fully committed and finalized [the plan]," one of the sources said, according to Nikkei Asia.
Report of a potential TSMC plant in Japan amid a global semiconductor shortage comes after the United States and Japan agreed to work together on supply chain issues in strategic competition with China.
In February TSMC's board of directors approved a plan to invest up to $177.7 million in a Japan-based subsidiary to expand 3D semiconductor material research, according to the Taipei Times earlier this year.
Supply chain security has been a top priority for Japanese Prime Minister Yoshihide Suga. Suga has said domestic semiconductor production is crucial to Japan's "economic stability."
The Japanese government may be anxious about a semiconductor shortage. Like other car manufacturers around the world, Japan's automakers may have forecasted lower demand for the rest of the year. The industry is reeling from a "supply crisis," according to reports.
TSMC clients, including Sony, operate plants in Kumamoto Prefecture. A potential TSMC facility would meet demand for image sensors, automotive microcontrollers and other chips, according to Nikkei Asia.
The Taiwanese firm could be expanding its global presence. Earlier this year the company said it is to build a $12 billion factory in Arizona and that construction had already begun, according to CNBC last week.