Does Japan’s $21B U.S. Chip Investment Raise Pressure on Korea?

Headquarters of GlobalFoundries. (Photo courtesy of GlobalFoundries) As U.S. President Donald Trump announced a plan to build two new GlobalFoundries semiconductor manufacturing plants in New York state based on Japan’s investment of $21 billion, Japan’s investment in the U.S. has expanded from the energy sector to the semiconductor sector. Given that this investment is part of a U.S.-Japan trade agreement, observations are emerging that the possibility of increasing pressure on South Korea to invest in the U.S. semiconductor industry cannot be ruled out. On Oct. 15, the Ministry of Foreign Affairs of Japan announced, regarding Japan’s semiconductor investment plan revealed by President Trump on Truth Social, that the U.S. and Japan will set out to build a semiconductor supply chain. The Ministry of Foreign Affairs stated in a press release that this investment is “the first project concerning semiconductors among the contents of the agreement on investment in the U.S.,” and that “the goal is to build a resilient supply chain in the semiconductor sector, which is strategically important from the perspective of economic security.” Japanese Minister of Economy, Trade and Industry Ryosei Akazawa also met with reporters and said, “I believe that expanding semiconductor production capacity in cooperation with the U.S. is very important for promoting the economic security of both countries.” The Japanese investment funds will be injected into two new plants that foundry (contract manufacturing) company GlobalFoundries is building in Malta, New York. A total of $10 billion will be injected into the first plant, with a plan to begin mass production of semiconductors starting in 2029. The remaining $10 billion will be injected into the construction of the second plant. The two plants are expected to each produce 900,000 300mm wafers annually, which is the largest semiconductor production capacity in the U.S. The U.S. government expects the creation of more than 1,000 manufacturing jobs. Prompted by the Japanese investment, the US Department of Commerce decided to reallocate $955 million in CHIPS Act subsidies provided to GlobalFoundries and acquire an additional 4% stake. According to the Ministry of Foreign Affairs of Japan, the newly built plants will produce semiconductors used in automobiles, industrial machinery, smartphones, and AI data centers. Japanese media outlets forecast that they will supply chips to Japanese automaker hubs located within the U.S. Reuters stated that major customers include Apple and Japanese company Renesas Electronics. GlobalFoundries also stated that it would cooperate with Japanese equipment companies. GlobalFoundries Chief Executive Officer (CEO) Tim Breen stated in a statement, “We have great interest in Japanese equipment suppliers becoming a part of this,” and added, “We will actively cooperate with the Japanese ecosystem that possesses excellent technology.” Kyodo News and others reported that Tokyo Electron will supply the equipment. This investment is the third among Japan’s $550 billion scale investment projects in the U.S. following the U.S.-Japan trade negotiations. It is notable that while Japan is contributing a large sum to build an essential semiconductor supply chain, including for automotive use, which is an urgent pending issue in the U.S., the investment is simultaneously designed to benefit Japanese semiconductor equipment companies and Japanese automakers. As the supply shortage of essential semiconductors, such as those for automobiles, has worsened amid surging demand for AI server memory, arguments have even been raised in U.S. political circles that prioritizing the supply of automotive semiconductors within the U.S. is necessary. Observations are emerging that, prompted by the announcement of Japan’s semiconductor investment plan in the U.S., an atmosphere pressuring semiconductor powerhouses such as South Korea and Taiwan for additional investments in the U.S. could grow. The U.S. is demanding that South Korea increase the production of semiconductors, including memory, within the U.S. TSMC has decided to invest an additional $100 billion in the plant it is building in Arizona, and there have also been reports that it could make new investments in the Tera Fab being promoted by Tesla CEO Elon Musk in Texas.