Japanese companies are going to invest up to 21 billion dollars in the construction of two chip factories in the United States. These will be owned by the American government and Japanese investors. The plan is part of a larger deal between Japan and the Trump administration.
Japan will invest a total of 550 billion dollars in the US in the coming years, in exchange for President Trump's promise to lower import tariffs on Japanese goods. Immediately after making the agreement, the latter already happened: for example, the tariff on Japanese cars went from 25 percent to 15 percent. The US has set the condition that Japan actually carries out the investments.
The management of the chip factories will be in the hands of GlobalFoundries, a major manufacturer in the semiconductor market. A semiconductor is the material from which a microchip is made. The company does not sell its own chips but produces them for others.
Construction of the first factory is to start at the end of this year. The intention is that chip production will begin in 2029. At the end of 2028, it will be decided whether a second factory will actually be built.
Dependent on China
On paper, it is not a bad idea for Japan to invest in the American factories. For most Japanese goods, the US is the largest buyer, including in the semiconductor industry and in the sale of chip machines. Lower import tariffs are therefore favorable.
In addition, Japan wants to decouple more from China, the country from which Japan currently imports cheap chips. But above all, Japan wants to keep the ties with the United States warm. This is important, partly because Japan is largely dependent on the US regarding national security.
NOS op 3 made a video about the tensions between China and Japan:
Japan also hopes to earn something from the investment. Ideally, manufacturers of chip machines in Japan can sell their machines to the chip factories.
Production to own country
The United States, for its part, wants to bring the chip industry back more to itself. The country has already made a huge catch-up in recent years, but not enough to American satisfaction. The US fears that the global supply chain will end up in Chinese hands.
Despite all ambitions, it is uncertain whether the first factory will be completed on time and whether it can start operating quickly. In America, wages and costs for factories are high. In a similar project by the Taiwanese company TSMC, the largest independent manufacturer of semiconductor chips, the construction of a factory in Arizona experienced significant delays.
The United States wants to move forward very much but does not always have the manpower and knowledge in-house to start up and keep such advanced factories running. In recent years, America has outsourced such tasks to countries like South Korea, Taiwan, Japan, and the Netherlands.
Criticism
It remains to be seen whether the Japanese investments will prove financially sustainable. This thought is also present among Japanese citizens. They criticize the plans, seeing their money already disappearing to the US.
Japanese people have difficulty with Trump's unpredictability: they see that it is hard to make firm agreements with the American president. More than a quarter of Japanese see the US as the biggest threat to world peace.
Japanese citizens also want to become less dependent on China, but among a large part of the population, there is fear that the dependence is now shifting from China to the US. Japanese people would prefer the country to invest in its own industry.
How can Japan invest billions?
Japan's annual budget in 2025 was approximately 770 billion dollars, which means the country could never finance the mega-agreement itself. Therefore, the Japanese government encourages companies to invest. The government offers subsidies, support, and guidance for a larger presence in the American market.
The construction of the chip factories in the US is not the first project under the recent trade agreements between Japan and the United States. Earlier, Toyota promised to invest up to ten billion dollars in its American production facilities.
Japanese top executive Masayoshi Son of tech investment company Softbank made a huge commitment at the end of 2024: within four years, the company wants to invest one hundred billion dollars in the US. That should create about 100,000 jobs, focused on artificial intelligence. The executive is a billionaire and has visited President Trump several times in the past.