KUMAMOTO (Kyodo) -- Taiwan Semiconductor Manufacturing Co. said Friday it has started mass production at its first factory in Japan, as the government steps up efforts to strengthen supply chains for critical and essential goods.

The factory in Kumamoto Prefecture produces logic chips with 12 to 28 nanometer process technologies for use in cars and image sensors for customers such as Sony Group Corp. and auto parts maker Denso Corp.

The world's largest contract chipmaker plans to build its second factory in Japan next to the first plant to produce more advanced 6-nanometer chips. The construction is expected to begin by March next year and the company seeks to start operations by the end of 2027.

The Japanese government has agreed to offer more than 1 trillion yen ($6.3 billion) in subsidies to TSMC. It sees domestic chip production as critical for its economic security as heavy dependence on major supplier Taiwan poses geopolitical risks stemming from rising tensions between the United States and China over the self-ruled island.

Kumamoto Gov. Takashi Kimura called on TSMC to consider setting up its third plant in the prefecture, when he visited its headquarters in Taiwan in August.