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Japan’s Sumitomo Electric to create 5G chips in US

The company will produce semiconductors for the US and European markets as the global chip shortage continues

Sumitomo Electric, a Japanese chipmaker, will produce semiconductors for 5G base stations in the US from September, aiming to serve the US and European markets.

The company, which has over 270,000 employees in over 30 countries, plans to double its supply capacity with its US operations, according to Nikkei Asia. It reportedly holds a 70% share of this semiconductor technology while also being a key supplier to China’s Huawei.

The chipmaker has reportedly set up a production facility in a factory in New Jersey, operated by US manufacturer II-VI, with the investment said to be at “several billion yen” (1 billion yen is worth around $9 million). The factory is set to produce transistors, a core component of 5G base stations, that amplify signals.

Semiconductors produced in the US will be supplied to the US and European units of communications equipment manufacturers such as Ercisson and Nokia. Since around 90% of Sumitomo Electric’s current supply is reportedly provided to Chinese manufacturers, the company is looking to increase sales to US and European clients.

This move comes amid a global semiconductor chip shortage and falls in line with US policy, which is trying to attract chipmakers to its territory. Legislators are discussing a bill that could see $52 billion spent on boosting domestic semiconductor manufacturing in the next five years. The legislation is trying to encourage US manufacturers to out-compete countries like China in critical technologies and help the country’s economic and national security, according to Senate Majority Leader Chuck Schumer.

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Taiwan’s TSMC is also reportedly planning to build an additional five chip plants in Arizona, with the company aiming to build six factories in the next three years. This project represents a major expansion of TSMC’s plans to shift some of its manufacturing to the US, considering that it produces most of its chips in Taiwan. It is not yet clear whether TSMC will receive any government funding to build more chip factories in Arizona, although this could still change.

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