Japan is seeking to revive its semiconductor industry sector, but its recent investments reveal Tokyo's tendency to contribute to strengthening the American chip industry, in light of the pressures associated with its trade relations with the United States.
Japan intends to invest up to $21 billion to build two electronic chip factories in the US state of New York, according to an agreement announced last week by Global Foundries.
The investment comes within the framework of a Japanese pledge to pump $550 billion into the United States, according to an agreement concluded with the administration of US President Donald Trump in exchange for reducing customs duties. Under the agreement, it is up to the US President, and not Japan, to choose the projects to which investments will be directed, according to Reuters.
This, according to analysts, reflects the price that Japan pays to maintain its trade relations with the United States, the largest economy in the world and its closest security partner. However, experts believe that the pledge, which was agreed upon in July 2025, will not contribute much to reviving the Japanese chip industry, and its impact will be limited in enhancing the flexibility of local supply chains.
“Japan is financing semiconductor production capabilities in the United States, without necessarily guaranteeing much of the advanced chip technology or domestic manufacturing capabilities it seeks,” said Nori Chiu, investment director at White Oak Capital.
Trump imposed tariffs on countries around the world last year, in an attempt to reduce the US trade deficit, while the governments of South Korea and Taiwan also pledged investments in the United States.
This does not represent the first time that Japan has been subjected to American pressure in the chip sector. In the 1980s, when Japan was a dominant global center in the semiconductor industry, it agreed to restrict its chip exports to the United States, a period whose memory remains a sore point for officials in Tokyo.
A Japanese government source, who requested anonymity due to the political sensitivity of the issue, said: “Investing in the United States is, in the end, a way to deal with Trump. “It is mainly about buying time to maintain relations between the United States and Japan.”
An indispensable partner
Earlier this month, Japanese Minister of Economy, Trade and Industry Ryusei Akazawa, in response to a question about whether Japanese investments in the United States might lead to a decline in investments within Japan, said: “We believe that investment in the United States and domestic investment dedicated to growth are completely compatible.”
Akazawa added last week that “Japan is a partner that the United States cannot do without, in order to maintain its superiority as a dominant power on the economic and security levels, as well as in the technological field.” Akazawa had negotiated the investment pledge in a previous position.
It is expected that Japanese companies that manufacture chip production equipment, such as Tokyo Electron, will benefit from these investments, at a time when the artificial intelligence boom has boosted their profits. Renesas Electronics will also be among the clients, according to Global Foundries CEO Tim Breen.
Tokyo needs to arrange the necessary financing for chip factories, as part of a package that includes previously announced projects, including investments related to oil and natural gas and small nuclear reactors.
The state-backed Japan Bank for International Cooperation, along with commercial banks, will provide loans to finance projects, with guarantees from the Nippon Export and Investment Insurance Company.
But Japanese banks showed reluctance to participate, due to the cost of procuring the large amounts of US dollars needed for financing, which prompted Tokyo to request assistance from JPMorgan and other American banks, according to what Reuters previously reported.
Japan, in turn, faces financial restrictions, as it has the highest debt-to-GDP ratio among advanced economies, at a time when Prime Minister Sanae Takaichi's fiscal expansion plans are raising investor concerns.
Investment as a tax
Takaichi aspires to pump joint investments between the public and private sectors amounting to about $2.3 trillion until the fiscal year 2040, distributed among 17 Japanese strategic sectors, including artificial intelligence and semiconductors.
A Japanese government source said that the growing importance of economic security prompted the government to adopt a vision that considers the presence of a local industrial base to be extremely important, declining to reveal his identity due to the political sensitivity of the issue.
Japan's main project in the chip sector is Rapidus, which seeks to begin large-scale commercial production of advanced chips next year, but still faces widespread skepticism among the industry.
Tokyo also supports Nuitra, a company specializing in artificial intelligence and robotics, and has provided financial subsidies to TSMC, Micron, and Kioxia to expand their production capabilities in Japan.
The first government source said that if US-manufactured chips could be integrated into Japan's semiconductor supply chain, there would be no need to produce all components domestically.
For his part, Atsushi Osanai, a professor at Waseda University, said: “Whether investment in chip factories succeeds or not, Japan will have to treat it as a tax.”
Despite escalating global economic fluctuations and geopolitical tensions, the Saudi real estate market continues to attract international investments, supported by clear economic policies, expanding development opportunities, and demand for housing. In the latest indications of this trend, Arada Real Estate Development Company is entering the Saudi market through a partnership with the local Extopia, within a portfolio of lands and projects worth 50 billion riyals ($13.3 billion), launching with a residential project in the Al-Rimal neighborhood in Riyadh worth 14 billion riyals, in a step that reflects the company’s confidence in the growth prospects in the Kingdom despite the uncertainty witnessed in global markets.
The Chairman of the Board of Directors of Arada, Muhammad Al-Dabaan, believes that this trend is based on long-term confidence in the prospects of the Saudi economy. In an interview with Asharq Al-Awsat, he stressed that investment in the Kingdom is not linked to passing market conditions, but rather to the developmental transformations led by “Vision 2030.”
He pointed out that the clarity of economic policies and the continuity of reforms and infrastructure development provide investors with the elements to make a long-term investment decision with confidence.
He said that raising the rate of home ownership and improving the quality of life are among the primary goals of the “Saudi Vision,” indicating that his company seeks to contribute to achieving these goals by increasing housing options and developing integrated communities that respond to the needs of families.
He went on to say: “No single project can determine market prices; They are affected by supply and demand, land and construction costs, and financing. However, expanding supply, diversifying products, and improving development efficiency are factors that contribute to enhancing competition and providing broader choices for buyers.”
The beginning... Al-Rimal neighborhood
It represents the first project in the Al-Rimal neighborhood (northeast of Riyadh), with a value of 14 billion riyals and includes about 3,500 villas and townhouses. The company does not view the residence as an independent unit only, but as part of a community in which services, facilities, and green spaces are integrated. The goal is to provide real and sustainable value to the population, in line with the Kingdom’s ambitions in the real estate sector, according to Al-Dabaan.
He revealed the secret of choosing to invest in the Kingdom, saying: “It is not dependent on a passing market circumstance, but rather is based on firm confidence in the future of the country, and in the economic and development transformation led by (Vision 2030) with the support of the government,” stressing that the country, through the clarity of its vision, the continuity of its reforms, and the development of its infrastructure and investment environment, has established foundations that give investors the ability to make long-term decisions with confidence.
At a time when the world is witnessing rapid economic and geopolitical changes, the entry of an international developer like Arada into the Saudi market reflects a practical conviction in the solidity of the opportunities offered by the Kingdom and its growth prospects.
He explained that this project is an investment in the future and not just a response to an existing demand today, and that the partnership aims to contribute to the development process through integrated housing projects that suit the needs of the local market and the aspirations of its residents. He explained that the first project in the Rimal neighborhood is the beginning of a long-term commitment to the Kingdom.
Increasing the ownership rate
Al-Dabaan continued that the company looks optimistically at long-term opportunities in the Saudi market, supported by population growth, the formation of new families, and urban expansion, in addition to the initiatives launched by the Kingdom within “Vision 2030” to raise the ownership rate and improve the quality of life.
Al-Dabaan believes that the next stage will not be measured by the number of new units alone, but rather by the ability of developers to provide communities that suit the residents’ lifestyle and meet their daily needs. He stated that location, availability of financing, purchasing power, quality of infrastructure, and trust in the developer will all be factors that will affect demand. While prices will also remain linked to land, construction, financing and supply levels.
He stated that excellence will be for the developer that combines quality design and implementation, integration of facilities and services, and commitment to what it promises to buyers. This is what Arada aspires to, which is summed up in integrated residential communities based on international development expertise, taking into account the specificity of the Saudi market, and adding lasting value to families and cities.
Partnership with the local “Extopia”.
In the details of the new step, the “Arada” Real Estate Development Company decided to expand its investments in the Kingdom, by launching the “Saudi Arada” Company in partnership with the local “Extopia”, in a step aimed at developing integrated residential projects and communities in a number of major cities in the Kingdom, within a portfolio of lands and projects with a total value of 50 billion riyals ($13.3 billion).
Under the partnership, Saudi Arada will have access to a land portfolio extending over an area of 10 million square metres, distributed across sites in Riyadh, Jeddah and Makkah Al-Mukarramah, allowing the development of multiple real estate projects in the coming years.
Al-Dabaan, who is Chairman of the Board of Directors of Extopia, assumed the presidency of the Board of Directors of the new entity, within the framework of the partnership that combines Arada’s expertise in developing residential communities with the local knowledge of its Saudi partner.
Speaking to Asharq Al-Awsat, Al-Dabaan said that the launch of the company represents the beginning of a long-term presence in the Kingdom, based on strategic locations that allow the development of integrated communities on a large scale, indicating that the Saudi housing market has opportunities for growth in the coming years.
He added that the partnership combines international experience in real estate development and knowledge of the nature of the local market, which supports the company’s plans for expansion and participation in achieving the goals of “Vision 2030” related to housing and quality of life.
Villa and townhouse
The new project in the Rimal neighborhood includes about 3,500 villas and townhouses, in addition to educational, commercial, and sports facilities and a community center, as well as green spaces that include planting about 100,000 trees, as part of the company’s direction towards developing communities that combine residential units and daily services.
The company is scheduled to work in coordination with the relevant government agencies to prepare the general plan for the project, in accordance with regulatory requirements and urban development goals in the capital.
According to the company, the project will be financed through an investment structure regulated by the Saudi Capital Market Authority, managed by a licensed financial company, and construction and sales will begin during 2027.
International expansion
Entering the Saudi market comes within the international expansion strategy of Arada, whose portfolio of projects under development amounts to about 189 billion riyals ($50.4 billion), distributed across five markets including Saudi Arabia, the Emirates, the United Kingdom, Australia and Syria.
The company's portfolio includes more than 70,000 residential units, while the number of units it has completed so far has reached about 17,000 units, according to its data.
The company's entry into the Kingdom represents an extension of the trend of international real estate developers towards taking advantage of the opportunities provided by the Saudi residential sector, in light of population growth, urban expansion, and government programs aimed at increasing the housing supply and diversifying the options available to buyers.
Quality of life
The new project in Riyadh is linked to the goals of improving the quality of life and enhancing green spaces in Saudi cities, within the “Vision 2030” programs.
The Royal Commission for the City of Riyadh, through the “Green Riyadh” programme, is working to plant 7.5 million trees throughout the capital, and to raise the per capita share of green spaces from 1.7 square meters to 28 square meters by 2030.
Through its upcoming projects, Arada Saudi Arabia seeks to develop residential communities that integrate facilities, services and open spaces, in a market that is witnessing increasing competition between local and international developers to meet the demand for housing of various categories.
