Japan's $21 billion chip bet: who wins Asia's tech bloc race?

<p><em>Special Reporting from LSN News, adapted from today's Power Play Asia episode. <a href="https://youtu.be/ZCn7u6Q4uYA" target="_blank" rel="noopener">Watch the video on YouTube.</a></em></p>

<p>On Wednesday, a chipmaker in upstate New York announced two new factories, and Japan will pay for them. The same evening in London, Nvidia's Jensen Huang said the United States should enhance its AI dialogue with Chinese researchers. On Thursday in Tokyo, trade minister Ryosei Akazawa said the projects will help both countries gain a competitive edge in the AI era. Two days, two moves: build a bloc, and keep a channel open to Beijing.</p>

<h2>Japan's chip bet and the price of friendship</h2>

<p>According to Reuters, Japan will invest up to $21 billion to build two chip factories in Malta, New York, jointly owned by the US government and Japanese interests, and operated by GlobalFoundries. Japan provides all the capital. Japan's foreign ministry puts the first phase at about $10 billion, with construction to begin by the end of this year. GlobalFoundries expects that first factory to come online in 2029, adding about 900,000 wafers a year when fully running. These are mature-node chips, the workhorse parts for cars, industrial machines, smartphones and AI data centres. GlobalFoundries chief Tim Breen told Reuters the US government's stake in the company will rise from 3 to 7 percent, and that early customers include Japan's Renesas and Apple.</p>

<p>Reuters says the project falls under last year's deal for Japan to invest $550 billion in America, in return for lower US tariffs on Japanese cars and other goods, from at least 25 percent to 15. Under that arrangement, Trump selects the projects, and available cash flows are split evenly until a set allocation is reached; after that, 90 percent goes to the United States. Akazawa rejected criticism that the scheme makes Japan subservient, saying projects face rigorous bilateral review. Tokyo's return is industrial: the foreign ministry says Tokyo Electron and Screen want to supply equipment, and Renesas wants to buy the chips. And Trump, Kyodo reports, says money from Japan, South Korea and Taiwan is boosting American chip production.</p>

<h2>Blocs, hedges and an AI channel</h2>

<p>Why mature nodes? Because that is where China has surged. In a March 2025 filing to US trade officials, the Semiconductor Industry Association said China's share of global mature-node capacity nearly doubled between 2015 and 2023, from 19 to 33 percent. Washington's answer is Pax Silica, a State Department declaration on AI and supply-chain security that warns of overcapacity and unfair dumping. Its signatories include Japan, South Korea, Singapore, India and Australia. Beijing's answer is the World Artificial Intelligence Cooperation Organization, headquartered in Shanghai. China's foreign ministry says 29 countries signed its founding agreement in July, among them Indonesia, Laos, Pakistan and Russia. Kazakhstan appears on both lists.</p>

<p>Even friends are hedging. In New Delhi on Wednesday, India's electronics and IT minister Ashwini Vaishnaw said, "There are times when friends become foes," urging India to find where it is vulnerable to other countries' policies.</p>

<p>And the rivals are talking. The South China Morning Post, citing sources, reports that US and Chinese technical teams are in regular talks on a framework for handling AI-related incidents, aiming for a deliverable when Xi Jinping and Donald Trump meet at APEC in Shenzhen next month. Huang told CNBC, "We absolutely should work with each other so that we advance the technology safely."</p>

<h2>Scorecard and verdict</h2>

<p>On money, Washington is ahead: Tokyo is paying for the factories in full. On capacity, Beijing has the head start: by 2023 it held a third of global mature-node capacity, and the first New York factory will not produce until 2029. On coalitions in Asia, it is split: Pax Silica holds the region's chip powers, while Beijing's AI body has signed up parts of Southeast and Central Asia. On trust, Washington is under strain: Tokyo must defend the terms at home, and New Delhi is openly hedging.</p>

<p>Power Play Asia's verdict: Washington is winning the money race, not yet the capacity race. Japan is buying two kinds of insurance at once, tariff relief and supply security, and paying a premium for both. Beijing does not need to stop the bloc; it only needs time and a seat at the AI table. Watch three things: whether ground breaks in Malta this year, whether Shenzhen produces an AI incident channel, and which side Southeast Asia's undecided capitals join next.</p>

<h2>Sources</h2>

<ul>

<li><a href="https://gf.com/news-and-events/news/globalfoundries-selected-to-operate-two-new-semiconductor-fabs-in-new-york-under-landmark-us-japan-initiative/" target="_blank" rel="noopener">GlobalFoundries press release, 14 Oct 2026</a></li>

<li><a href="https://ca.investing.com/news/stock-market-news/japan-to-invest-up-to-21-billion-in-two-us-chip-factories-to-be-run-by-globalfoundries-4880637" target="_blank" rel="noopener">Reuters (Nellis, Shepardson, Yamazaki), 14/15 Oct 2026, via Investing.com</a></li>

<li><a href="https://www.mofa.go.jp/press/release/pressite_000001_02741.html" target="_blank" rel="noopener">Ministry of Foreign Affairs of Japan, 15 Oct 2026</a></li>

<li><a href="https://english.kyodonews.net/articles/-/88304" target="_blank" rel="noopener">Kyodo News, 15 Oct 2026</a></li>

<li><a href="https://www.semiconductors.org/wp-content/uploads/2025/03/SIA_TradeInvestigation_0325_v2.pdf" target="_blank" rel="noopener">Semiconductor Industry Association, Mar 2025</a></li>

<li><a href="https://www.state.gov/pax-silica" target="_blank" rel="noopener">US Department of State, Pax Silica page (accessed 16 Oct 2026)</a></li>

<li><a href="https://www.fmprc.gov.cn/eng/wjb/wjbz/hd/202607/t20260717_11984747.html" target="_blank" rel="noopener">Ministry of Foreign Affairs of China, 16 Jul 2026</a></li>

<li><a href="https://www.reuters.com/world/china/twenty-nine-countries-sign-agreement-establish-global-ai-cooperation-body-2026-07-16/" target="_blank" rel="noopener">Reuters headline 16 Jul 2026 &quot;Twenty-nine countries sign agreement to establish global AI cooperation body&quot;</a></li>

<li><a href="https://www.indiatoday.in/india/story/friends-become-foes-ashwini-vaishnaw-on-how-india-guards-against-geopolitical-shocks-3017070-2026-10-14" target="_blank" rel="noopener">India Today, 14 Oct 2026</a></li>

<li><a href="https://www.tribuneindia.com/news/india/friends-can-become-foes-ashwini-vaishnaw-says-geopolitical-shifts-demand-constant-recalibration-of-indias-tech-strategy/" target="_blank" rel="noopener">The Tribune</a></li>

<li><a href="https://www.scmp.com/news/china/diplomacy/article/3370926/us-and-china-race-shape-ai-agenda-ahead-xi-trump-talks-shenzhen-sources-say" target="_blank" rel="noopener">South China Morning Post, 15 Oct 2026</a></li>

<li><a href="https://www.cnbc.com/2026/10/15/jensen-huang-nvidia-china-ai.html" target="_blank" rel="noopener">CNBC, 15 Oct 2026</a></li>

</ul>