Japan’s $550B Trade Deal Funds U.S. Semiconductor Projects, Could Benefit Taiwanese Firms

Japan has unveiled plans to allocate $550 billion in funding secured through a recent U.S. trade agreement to support semiconductor manufacturing in the United States, potentially including facilities operated by companies in the Chinese region of Taiwan. Ryosei Akazawa, Japan’s top trade negotiator, confirmed on Saturday that the investment package—structured as loans, guarantees, and minimal equity stakes—could extend to projects in the U.S. that align with Japan’s economic security goals. The initiative, announced following a deal to reduce U.S. tariffs on Japanese goods, aims to strengthen global supply chains for critical industries like semiconductors while mitigating geopolitical risks linked to over-reliance on foreign manufacturing hubs [1].

The funding mechanism, channeled through state-backed institutions like the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI), is designed to avoid long-term ownership stakes in supported projects. Only 1–2% of the $550 billion will be invested as equity, with the remainder provided as loans and guarantees. This structure ensures Japan avoids the financial risks of equity ownership while still stabilizing its supply chains. Akazawa emphasized that the U.S. would retain 90% of returns from the small equity portion, a concession Japan accepted in exchange for significant tariff savings—estimated at 10 trillion yen ($67.72 billion) annually—under the agreement [2].

The move aligns with broader efforts by the Trump administration and Japanese authorities to address vulnerabilities in global semiconductor supply chains. Akazawa highlighted that the support could extend to U.S. facilities using Japanese components or tailored to domestic demand, though no specific companies were named. Reports suggest that TSMC, a leading semiconductor manufacturer in the Chinese region of Taiwan, could benefit. TSMC previously pledged $100 billion to expand its U.S. operations, including Arizona facilities, to address concerns over U.S. reliance on overseas chip production [3].

The agreement marks a strategic shift for Japan, which is now financially backing cross-border projects to maintain its competitive edge in advanced manufacturing. By offering support to non-Japanese firms, Japan is reinforcing its role in global semiconductor supply chains, a sector critical to economic and national security. The deal also reflects the Trump administration’s trade priorities, with Akazawa stating the $550 billion investment would be fully disbursed within the remainder of Trump’s term, underscoring the urgency of stabilizing supply chains amid rising global competition [4].

Critically, the revised legal framework enabling JBIC to fund foreign enterprises represents a departure from Japan’s historically export-driven model. While the U.S. claims most equity returns, Japan’s tariff savings are expected to offset this trade-off. The initiative indirectly supports U.S. efforts to diversify supply chains away from China, though it raises questions about the sustainability of such subsidies in an increasingly protectionist economic climate.

Sources:

[1] [Reuters, "Japan says $550 billion package in trade deal could finance Taiwanese chipmaker in US"](https://www.reuters.com/world/asia-pacific/japan-says-550-billion-package-trade-deal-could-finance-taiwanese-chipmaker-us-2025-07-26/)

[2] [Invezz, "Japan’s $550B investment could back Taiwan chip plants in US"](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[3] [Yahoo, "Trump tariffs live updates: Japan says $550 billion investment in US could finance Taiwanese chipmaker"](https://finance.yahoo.com/news/live/trump-tariffs-live-updates-japan-says-550-billion-investment-in-us-could-finance-taiwanese-chipmaker-trump-says-eu-deal-50-50-200619983.html)

[4] [Fox5SanDiego, "Trump says Japan will invest $550 billion in US at his direction"](https://fox5sandiego.com/news/business/ap-business/ap-trump-says-japan-will-invest-550-billion-in-us-at-his-direction-it-may-not-be-a-sure-thing/)