TSMC's decision to build chips in Japan has become a key component of Tokyo's push to revive advanced semiconductor manufacturing and harden its industrial supply chains against disruptions as tensions with neighboring China grow.

The latest financial commitment, which will add to money given to the world's biggest chipmaker for its first factory, could push taxpayer-funded subsidies for TSMC beyond 1 trillion yen.

TSMC, which is also expanding in the U.S. and Germany, plans to ramp up to mass production in Japan before the end of the year. Total investment in the venture, including a second plant, will exceed more than $20 billion, according to the Taiwanese company.