US Investment Boom Masks Sectoral Divergence

Foreign direct investment into the United States reached a record level in 2025, yet sector-level data reveal an uneven distribution of gains as the country adapts to the policy direction of President Donald Trump’s second administration. Estimates from fDi Markets show that total FDI capital expenditure climbed to $321.4 billion, while 2,055 investment projects were announced during the year - just below the record 2,260 projects recorded in 2024.

Growth has been concentrated in sectors aligned with national security and advanced manufacturing priorities. Space and defence investment recorded 32 projects in 2025, representing a 167 per cent increase compared with the annual average during Joe Biden’s presidency. The expansion reflects a wider global rise in defence spending and Washington’s renewed emphasis on strengthening military capabilities.

Business machines and equipment also posted strong gains, with 31 project announcements, a 176 per cent increase from the previous four-year average. Much of this activity has been driven by Taiwanese manufacturers such as Wistron and Foxconn expanding their US footprint to support the rapid build-out of artificial intelligence infrastructure. Semiconductor investment has continued to follow a similar trajectory, with project numbers rising 31 per cent, highlighted by Taiwan Semiconductor Manufacturing Company’s expansion of its fabrication facilities in Arizona.

The pharmaceutical sector has also seen a significant increase in project announcements, rising 149 per cent compared with the Biden-era average. The growth comes as the Trump administration signals that tariffs could be imposed on pharmaceutical companies that fail to expand manufacturing operations within the United States.

However, the wider investment picture reveals declines in several traditionally strong sectors. Biotechnology investment fell 11 per cent in 2025 compared with the previous four-year average. Service-based industries also experienced setbacks, with business services projects dropping 36 per cent and software and IT services declining 24 per cent, reflecting structural shifts in white-collar employment and the growing role of artificial intelligence in corporate operations.

Traditional manufacturing segments have also recorded reduced activity. Investment in rubber manufacturing fell 53 per cent, textiles declined 34 per cent, and building materials projects decreased 14 per cent compared with the prior four-year period.

While overall foreign investment into the US remains robust, the latest figures highlight a clear shift in its composition. Capital flows are increasingly concentrated in advanced manufacturing, defence and semiconductor production—sectors closely aligned with national security priorities and the country’s evolving industrial strategy.