Japan plans to invest up to $21 billion in two semiconductor factories in New York, raising questions about whether its efforts to rebuild its domestic chip industry could be overshadowed by growing pressure to strengthen American manufacturing.
The investment, announced by US chipmaker GlobalFoundries on October 14, forms part of Japan’s broader $550 billion investment pledge to the United States under an agreement reached with President Donald Trump’s administration in July 2025. The arrangement was tied to lower US tariffs on Japanese imports, including automobiles.
Under the plan, GlobalFoundries will operate the factories, with construction of the first facility expected to begin this year and chip production targeted for 2029. The first plant is expected to create more than 1,000 jobs and add substantial manufacturing capacity in New York.
However, industry experts have questioned how much the investment will contribute to Japan’s own semiconductor capabilities. Nori Chiou, investment director at White Oak Capital, warned that Japan could finance American chip production without gaining significant advanced technology or strengthening domestic manufacturing.
Japan is simultaneously pursuing its own semiconductor revival under Prime Minister Sanae Takaichi, who has outlined plans for $2.3 trillion in public and private investment across 17 strategic sectors through fiscal 2040, including artificial intelligence and semiconductors.
The country’s flagship project, Rapidus, aims to begin mass-producing advanced chips in 2027, although the initiative faces industry scepticism. Tokyo is also supporting domestic manufacturing through subsidies for companies including Taiwan Semiconductor Manufacturing Company, Micron and Kioxia.
Japanese Industry Minister Ryosei Akazawa has argued that investment in the United States and domestic economic growth can proceed together.
Nevertheless, Japan faces financing challenges, including high public debt and the cost of securing the dollars required for overseas projects.
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The investment highlights the difficult balance Tokyo must strike between rebuilding its technology industry and maintaining vital trade and security ties with Washington.
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