Does Japan’s $21B U.S. Chip Investment Raise Pressure on Korea?
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
The U.S. government's plan to build two new GlobalFoundries semiconductor manufacturing plants in New York state, funded by Japan's $21 billion investment, has raised concerns about increased pressure on South Korea to invest in the U.S. semiconductor industry. This announcement, made by President Donald Trump, forms part of a U.S.-Japan trade agreement and aims to establish a resilient supply chain in the semiconductor sector, crucial for economic security.
Japanese Minister of Economy, Trade and Industry Ryosei Akazawa emphasized the importance of expanding semiconductor production capacity in cooperation with the U.S.
The first plant, receiving $10 billion, is scheduled to begin mass production of semiconductors in 2029, while the second plant, funded with the remaining $10 billion, is expected to follow suit. These plants will produce 900,000 300mm wafers annually, the largest semiconductor production capacity in the U.S. The U.S. Department of Commerce has reallocated $955 million in CHIPS Act subsidies to GlobalFoundries and acquired a 4% stake, anticipating the creation of over 1,000 manufacturing jobs.
Japanese investment funds will support the production of semiconductors for automobiles, industrial machinery, smartphones, and AI data centers, with major customers including Apple and Japanese company Renesas Electronics. GlobalFoundries CEO Tim Breen expressed interest in Japanese equipment suppliers joining the venture and pledged active cooperation with the Japanese ecosystem known for its technological excellence.
Tokyo Electron, a Japanese equipment company, has agreed to supply the necessary equipment for the plants.
Observers speculate that Japan's substantial investment in the U.S. semiconductor industry could prompt other nations, such as South Korea and Taiwan, to follow suit and increase their investments in the U.S. Moreover, the U.S. has urged South Korea to boost semiconductor production, including memory, within the country, with TSMC already planning to invest $100 billion in an Arizona plant and possibly making new investments in Tesla CEO Elon Musk's Tera Fab in Texas.
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