Japanese companies are pouring money into the US not only in the traditionally big-spending manufacturing sector, but also in such growth industries as artificial intelligence, giving Tokyo more economic contributions to highlight to Washington.
Japan ranked as the largest foreign direct investor in the US for a fifth straight year in 2023, according to data from the US Department of Commerce—a point that Prime Minister Shigeru Ishiba emphasized on February 7 in a news conference with US President Donald Trump.
“Japan is the closest economic partner of the United States,” Ishiba said. Japan will work to boost foreign direct investment in the US to USD 1 trillion, he said—up from nearly USD 800 billion at the end of 2023.
The automotive industry has remained a core driver of this spending. Toyota Motor and trading arm Toyota Tsusho have built a nearly USD 14 billion automotive battery factory in North Carolina that is slated to begin shipping out cells this April. Honda Motor, which plans to start manufacturing electric vehicles in the US this year, is spending USD 1 billion on to upgrade production facilities in Ohio.
Other investment has been spurred by the growing US appetite for Japanese food. Nissin Foods Holdings will in August start up its first new instant ramen production facility in the US in 47 years, and Kikkoman is building a soy sauce plant in Wisconsin scheduled to start shipments in the autumn of 2026.
The AI and semiconductor fields are expected to see particularly strong activity. SoftBank Group reportedly plans to contribute JPY 3 trillion (USD 20 billion) to the Stargate project, a joint AI infrastructure development project with ChatGPT developer OpenAI and Oracle. Investments will total USD 500 billion, according to SoftBank chairman and CEO Masayoshi Son.
The drive to develop AI will also be a tailwind for chips. Sumitomo Chemical expects to begin mass production of cleaning fluids used in chipmaking at a new factory in Texas in fiscal 2025.
Materials maker Resonac Holdings is opening a Silicon Valley facility to develop and evaluate cutting-edge chip assembly processes.
The weak yen and labor shortages could be negative factors when companies decide whether to invest in the US. Using funds earned in yen to invest would incur higher costs.
“The US unemployment rate is at a historic low,” said Kazuma Kishikawa of the Daiwa Institute of Research. “The challenge is whether companies can secure labor and increase production.”
Trump’s use of tariffs to gain leverage in trade negotiations is increasing uncertainty for Japanese companies and their supply chains. “Hasty investment decisions are generally risky,” said Keisuke Hanyuda, managing director and CEO of Owls Consulting Group.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.