Japan’s Chief Trade Negotiator and Minister of Economic Revitalization, Ryosei Akazawa, announced on Saturday that Japan reached a $550 billion investment deal with the United States this week. This investment will be used to fund a Taiwanese company in building a semiconductor factory in the U.S., as long as it uses Japanese components or meets the requirements of the Japanese supply chain.
As part of the conditions for lowering export tariffs with the U.S., Japan has agreed to push forward this massive investment plan covering equity, loans, and credit guarantees to the United States. However, the specific details of this plan have not been disclosed yet.
Akazawa stated in an interview with NHK, “Japan, the United States, and like-minded countries are collaborating to establish supply chains in key sectors to maintain economic security.”
He emphasized that this investment is not limited to Japanese or American companies. “For example, a Taiwanese semiconductor company building a factory in the U.S. and using Japanese components, or its products meeting Japanese requirements, can also receive financial support.”
Currently, the United States heavily relies on Taiwan Semiconductor Manufacturing Company (TSMC) to produce advanced chips, raising economic security concerns due to its proximity to communist China.
In March of this year, TSMC announced a $100 billion investment in the United States, expanding upon its previous commitment of $65 billion. This funding will be used to build three chip plants, two advanced packaging plants, and other facilities in Arizona. The first chip plant TSMC built in the state has already begun operations.
Japan will promote this investment through its state-owned Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI). Japan recently amended its laws to allow JBIC to provide financing to foreign companies deemed critical to the country’s supply chain. This agreement will help Japan avoid around 10 trillion yen (approximately $67.7 billion) in tariff costs, with Japan relinquishing some profits to limit overall losses.
According to the U.S.-Japan agreement earlier this week, tariffs on Japanese goods will be reduced to 15%, and tariffs on Japanese cars will drop from 27.5% to 15%.
Akazawa concluded by stating that Japan hopes to complete the execution of this $550 billion investment during Trump’s term in office.
(Reference: Reuters)