Why Phoenix is courting more Japanese businesses to set up shop in Arizona

Why Phoenix is courting more Japanese businesses to set up shop in Arizona

By Audrey Jensen

Masago Kuwabara, president and CEO of JX Nippon Mining & Metals USA, has seen a steady stream of opportunities for growth in the U.S. market over the years. In fact, his company first saw a path toward North American expansion in the 1990s because many Japanese semiconductor companies that came to the U.S. needed raw materials.

So when Taiwan Semiconductor Manufacturing Co. and other companies announced expansions into Arizona several years ago, Kuwabara said it was time JX Nippon to keep up and expand again into a larger facility to support the additional growth of the microelectronics industry here.

JX Nippon broke ground in 2022 on its new electronics materials plant in Mesa on 65 acres. The company, currently located in Chandler, wants to keep its current 125 employees and also planned to create 100 new jobs, the Business Journal previously reported.

Now, when other Japanese-owned companies visit the Phoenix area, Kuwabara helps educate those business leaders on the challenges of moving operations to the Grand Canyon State. Ultimately, he believes Arizona will become one of the key centers for semiconductors.

He was one of several panelists that spoke to a delegation of 40 Japanese businesses in the semiconductor industry hosted last week by the Greater Phoenix Economic Council, the Consulate General of Japan and the Japan External Trade Organization. The latest delegation that was in Arizona Feb. 22-23 was the fourth group of Japanese business leaders that have traveled to Phoenix in the past two years to explore expansion opportunities.

"Everybody wants to come here, there's [a lot] of construction going on," Kuwabara told the Business Journal.

He said he tells businesses about the long lead times for construction materials and also about the competition for labor. Arizona is also a good place to locate because lack of natural disasters, Kawabara noted.

"Definitely there's a lot of opportunity here but a lot of challenges they should realize," he said.

Semiconductors put Arizona on the map

The growth of the microelectronics industry in Arizona has attracted dozens of Japanese businesses that are interested in expanding in Arizona. In addition to Phoenix, Taiwan Semiconductor Manufacturing Co. is also opening new factories in Japan.

"Japan is still the strongest suppliers of those materials in the semiconductor industry," said Kenko Sone, the consul general of Japan in Los Angeles, who has attended multiple delegations held for Japanese businesses in Phoenix. "We would like to create very strong resilient supply chains in like-minded countries."

Arizona in the past few years has received a boost in interest from foreign companies, especially from Japan and other Asian countries that play large roles in semiconductors and other technologies.

During past visits, Sone said they have also invited Japanese restaurateurs to Arizona to help bring culture and amenities to the region. The February delegation had the opportunity to attend the Arizona Matsuri Japanese cultural festival while they visited.

The companies also toured Arizona State University and Amkor Technology Inc.'s existing facility in Tempe following a day of informational panels from businesses and city leaders.

More Japanese companies consider Phoenix metro

Thomas Maynard, senior vice president of business development for GPEC, said their team continues to follow up with companies about potential expansion projects well after their visits to the state.

"Our goal is [for them] to tell us what is their investment plan into the United States, what's their scope, what's their timing, and then we can really get started on our end on what we do best and help make the business case on behalf of the region," Maynard said.

Since TSMC's announcement in 2020, at least eight Japanese companies have expanded in Arizona, according to Greater Phoenix Economic Council research.

This includes Tokyo Electron America, Kokusai Semiconductor Equipment Corp., JX Nippon Mining & Metals USA Inc., NRS Logistics, Fujifilm Electronic Materials U.S.A. Inc. and Organo USA, a water treatment engineering firm, among others.

Arizona is already home to a large number of Japanese-owned businesses while Japan was the sixth largest exporter and fourth largest importer in Arizona in 2021.

Arizona in 2021 had 140 Japanese companies that employed nearly 13,000 people, according to GPEC research. Some of the largest Japanese companies in Arizona include Blue Yonder, IRIS USA, Midas, Fujifilm and Toshiba Business Solutions.

To further boost trade with Japan and other regions, the Arizona Commerce Authority has been looking to open new trade offices in Tokyo as well as Sao Paolo, Brazil, and Bangalore, India, according to request for proposals published by the ACA in 2023.