As Korea's investment in the United States lags, the Japanese government has effectively finalized a second deal to invest roughly $65 billion in next-generation small modular reactors (SMRs) in the US. According to the Nihon Keizai Shimbun on Wednesday, Japan is in talks with the US to invest $40 billion in a joint SMR project by GE Vernova and Hitachi, and $25 billion in NuScale Power's SMR. US Commerce Secretary Howard Lutnick emphasized a "win-win model," saying it "will be a great opportunity for the two countries to jointly build a large-scale SMR supply chain and export related technologies overseas." Japan had earlier wrapped up its first investment targets in oil and gas, power generation, and minerals in February this year.
Despite some concerns about "investing too fast," the Japanese government is accelerating its $550 billion investment in the US. Experts observe that Japan's aim lies in "securing first-mover advantage in supply chains." The broader plan is to preemptively respond to global power demand driven by the artificial intelligence (AI) transformation and data center expansion, while securing essential semiconductor materials in advance. A meticulous calculation underlies the strategy: through faster "economic security-oriented investment," Japan seeks to further strengthen strategic industry cooperation between the US and Japan and jointly counter China's "red supply chain."
The problem is that as Korea's US investment is delayed, the likelihood grows that core projects will be claimed first by others. In July 2025, the government signed a trade agreement to invest $350 billion in the US. When the handling of a special law on US investment was delayed amid conflict between ruling and opposition parties, the government stepped in to urge swift passage, and the bill finally passed in March this year. Yet there has been only beating around the bush over investment targets, with no word on concrete investment results.
"Commercial rationality," the investment principle the government has put forward, must be guaranteed. With an astronomical sum amounting to 82% of Korea's foreign exchange reserves ($427.9 billion) being invested, any loss would be a serious matter. At the same time, dragging out US investment must not lead to a situation where high-profitability investment opportunities are taken by competing countries or where Korea is left out of the supply chain ecosystem. The government must quickly determine a reasonable rate of return and accelerate the selection of investment targets such as nuclear power, shipbuilding, and liquefied natural gas (LNG) terminals. It also needs to prepare for the possibility that the US may ratchet up trade pressure citing delays in US investment. In particular, since US investment could intensify the won's depreciation and exchange rate instability, the government should set up an "investment safety net" by simultaneously pursuing currency swap negotiations with the US.
