Sony and TSMC Were Building Separate Plants in Kumamoto — Then in May, They Started Discussing Building One Together in Koshi

Kumamoto's semiconductor sites break down into two separate places: TSMC subsidiary JASM in Kikuyo Town, and Sony's own plant in Koshi City. The two companies had been investing independently until the May 8, 2026 MOU (a non-binding memorandum of understanding) opened talks, and the August 11 definitive agreement locked in the terms. The same day, TSMC's board also approved a separate set of capital-policy decisions: a first-ever dollar-dividend option and $29.4 billion in new capex. This piece sorts out five threads: the Koshi plant, the May MOU, the August 11 definitive agreement and capital-policy decisions, TSMC subsidiary JASM, and the July 28 earthquake. Recovery updates are tracked on an ongoing basis in our Kumamoto earthquake wrap-up.

Why Did the Government Subsidize Sony's Koshi Plant by Up to ¥60 Billion?

Sony's new Koshi plant is an image-sensor fab Sony Group has been building in Koshi City, Kumamoto Prefecture. On April 17, 2026, Japan's Ministry of Economy, Trade and Industry (METI) announced it would subsidize, under the Economic Security Promotion Act, up to ¥60 billion for this new plant under construction in Koshi City by Sony Semiconductor Manufacturing (SCK). That law is designed to strengthen domestic production of goods, including semiconductors, considered critical to Japan's supply security. Reuters, Jiji Press, EE Times, and the Asahi Shimbun all reported the same details the same day.

TSMC's press release from May references this plant directly. The original wording calls it "Sony's newly constructed fab in Koshi City, Kumamoto Prefecture" — phrasing that reads as though the building itself is already complete.

What Did the May 8 MOU Actually Put on the Table?

On May 8, 2026, Sony Semiconductor Solutions (SSS) and TSMC announced they had signed a memorandum of understanding (MOU) for a strategic partnership around next-generation image sensors. The MOU carries no legal force, and setting up the joint venture (JV) that would actually run the business is itself still at the exploratory stage. The core of the agreement is to explore building a next-generation image-sensor development and production line at the Koshi plant.

Both companies cite growing demand from physical AI applications — automotive and robotics among them — as motivation. Physical AI refers to AI that reads its surroundings through cameras and sensors and then makes its own judgments and takes action in the real world, and it depends on high-performance image sensors. TSMC's release also notes, alongside the JV's investment, new capital investment by Sony itself at its existing Nagasaki plant. That Nagasaki investment is not folded into the JV's investment — it's being considered as a separate track.

Both companies say these investments are being weighed on the premise that they would be phased in based on market demand and would receive support from the Japanese government. As of May 8, the investment amount, timing, and TSMC's equity stake in the JV remain undisclosed.

What Did the August 11 Definitive Agreement Actually Lock In?

Nikkei had reported on August 10, 2026 that Sony Group and TSMC planned to establish the next-generation image sensor joint venture within fiscal 2026, citing investment of roughly ¥1 trillion, an equity split of about 60% Sony and 40% TSMC, and mass production starting around 2029. The very next day, that reporting was confirmed by an official announcement.

On August 11, 2026, Sony Semiconductor Solutions and TSMC announced the execution of a legally binding definitive agreement to establish a joint venture, Advanced Vision Semiconductor Manufacturing Corporation, in Koshi City — advancing, three months on, from the non-binding May 8 MOU to a signed contract. Sony will contribute approximately ¥465 billion, combining cash and the transfer of its assets, while TSMC will contribute roughly ¥282 billion in cash; Sony will be the JV's sole controlling shareholder. Combined, that is about ¥747 billion — smaller than the "roughly ¥1 trillion" Nikkei had reported, though the same order of magnitude. The contribution split works out to about 62% Sony and 38% TSMC, broadly in line with the 60/40 split Nikkei had reported.

The release also confirmed that the Koshi plant facilities Sony has already invested in will be transferred to the JV through a corporate split. Volume production is expected to begin in 2029, matching the Nikkei report. The agreement is explicitly stated to be subject to regulatory approvals and government support considerations, so signing the contract does not by itself guarantee an unconditional start to operations.

Why Is TSMC Making Dividends Payable in US Dollars?

On the same day as the Sony agreement, TSMC's board of directors approved a cash dividend of NT$7.0 per share for Q2 2026 and, for the first time, introduced an option for foreign shareholders to receive that dividend in US dollars. The option is for foreign investors who hold TSMC shares directly on the Taiwan Stock Exchange: TSMC said that, starting with this distribution, it will provide foreign shareholders investing under Taiwan's "Regulations Governing Investment in Securities by Overseas Compatriots and Foreign Nationals" with the option to receive cash dividends in US dollars. Previously, dividends were paid in New Taiwan dollars, leaving investors to handle currency conversion and FX risk themselves.

One nuance is worth flagging. For holders of TSMC's American Depositary Shares (ADSs) — the shares represented by its ADR and traded on the NYSE under ticker TSM — the release states the same December 10, 2026 date for both the ex-dividend date and the record date, but it does not say ADS holders are covered by this new dollar-election option. ADSs already pay dividends in US dollars because the depositary bank converts the underlying NT-dollar dividend on holders' behalf, so nothing in the primary source confirms any practical change for investors holding ADSs in the US market.

Where Is TSMC's $29.4 Billion in New Capex Going?

At the same board meeting, TSMC approved capital appropriations of approximately US$29,442.50 million, earmarked mainly for three purposes: installation and upgrade of advanced technology capacity; installation and upgrade of advanced packaging (back-end processes that combine chips at high density) and mature/specialty technology capacity; and fab construction along with installation of fab facility systems.

Approving the dollar-dividend option, the $29.4 billion capex plan, and the definitive Sony joint-venture agreement in the same board meeting reflects the financial strength TSMC gained from record Q2 2026 net profit of NT$706.56 billion — enough to fund shareholder returns, new capacity, and a strategic partnership all at once.

What Is JASM, and How Is Sony Involved?

JASM (Japan Advanced Semiconductor Manufacturing) in Kikuyo Town is a subsidiary TSMC established in 2021. Sony Semiconductor Solutions announced, at the time of JASM's founding, that it would participate as a minority shareholder, with a stake reported at less than 20%. TSMC holds operational control, and Sony's position is that of an investor securing stable access to foundry capacity — a company that manufactures chips to other companies' designs — for its own image-sensor production.

At its founding in 2021, JASM Fab 1 was positioned as a foundry service starting with 22/28-nanometer specialty technology. Since then, the business has expanded, both in the process generations it covers and through the construction of a second fab. At its July 16, 2026 second-quarter earnings call, TSMC Chairman and CEO C.C. Wei said the company was ramping up mature-node capacity at JASM Fab 1 for CMOS image sensor applications. The original quote reads: "We are increasing our mature node capacity through JASM Fab 1 in Japan, for CMOS Image Sensor application," from the transcript.

The same call referenced a global plan to add one 3-nanometer fab each in Taiwan, Arizona, and Japan. That remark, however, came 12 days before the Kumamoto earthquake and named no prefecture, investment figure, or construction or start-up date.

How Did the Kumamoto Earthquake Affect the Two New Plants?

On July 28, 2026, a magnitude-7.1 earthquake struck Kumamoto. Sony's existing Kumamoto Technology Center (Kikuyo Town, operated by Sony Semiconductor Manufacturing) halted production. Sony Semiconductor Solutions' first report, on July 29, said the company was still assessing the damage.

The second report, on July 31, said operations were planned to resume in stages starting August 4, with a return to pre-quake operating levels expected by mid-August. As of August 10, no third report updating that plan had surfaced.

At JASM's Fab 1, the building itself was reported to be structurally undamaged. That assessment, though, came not from a TSMC press release but from a response to press inquiries reported by Focus Taiwan (CNA). TSMC said at the time it would continue evaluating the impact on its equipment.

Subsequently, TSMC's Japan unit posted on its official X account on August 3 that the plant's production had been restored ahead of schedule, and announced a ¥250 million donation to support Kumamoto's recovery. That account is corroborated by follow-up reporting from Nikkei and Focus Taiwan.

Neither company, though, has addressed the earthquake's effect on the construction schedule at either the Koshi new plant or JASM's second fab — the sites central to this agreement and to future expansion. That is not confirmation there was "no impact" — it simply means no official statement on the topic exists as of August 11. Ongoing recovery coverage is tracked in our Kumamoto earthquake wrap-up. For company background, see our profiles of Sony and TSMC.

Key Takeaways

• Sony and TSMC operate separate new sites in Kumamoto. Sony's Koshi plant (up to ¥60B in METI subsidies) and TSMC subsidiary JASM in Kikuyo Town differ in operator and ownership.
• The May 8, 2026 non-binding MOU advanced to a legally binding definitive agreement on August 11: Sony and TSMC will jointly own Advanced Vision Semiconductor Manufacturing Corporation, with Sony contributing ~¥465B and TSMC ~¥282B, Sony as controlling shareholder, and volume production targeted for 2029.
• On the same day, TSMC's board separately approved a first-ever dollar-denominated dividend election for foreign shareholders (Q2 dividend of NT$7.0/share) and roughly $29.4 billion in new capex. The dollar-dividend option is for direct Taiwan-market shareholders; nothing confirms it covers ADS holders.
• JASM is a TSMC subsidiary founded in 2021, with Sony as a minority shareholder (under 20%). TSMC has referenced ramping Fab 1's mature-node capacity and a plan to add a 3nm fab.
• The July 28 earthquake halted production at existing sites, but as of August 11, no official statement addresses earthquake impact on construction at the Koshi plant or JASM's second fab.
• The August 11 definitive agreement broadly confirmed what Nikkei had reported on August 10 — investment scale, equity split, and 2029 mass production — though the deal remains subject to regulatory approval and government support.