Taiwan’s TSMC and Japan’s Sony Group Corp are in serious talks to jointly build a chip factory in Japan, with the state agreeing to pay part of the roughly 800 billion yen ($7.15 billion).

The plant in Kumamoto, southern Japan, is expected to produce semiconductors for cars, camera sensors and other products that have been adversely affected by a global chip shortage and are expected to start operating in 2024.

Japanese officials are also concerned about the stability of their industries, as a global chip shortage forces automakers to curtail production.

TSMC is concerned about the concentration of chip production in Taiwan, where most of the world’s most advanced chips are produced, in the light of aggression from mainland China, which does not rule out the use of force to control the democratic island.

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