Japan to invest up to $21 billion in two US chip factories to be run by GlobalFoundries

The United States and Japan have collaborated to invest up to $21 billion in two new chip-production facilities in New York state. GlobalFoundries, a semiconductor manufacturer mostly owned by Abu Dhabi’s Mubadala Investment Company, will join forces with the U.S. government to operate these plants. The Commerce Department will hold a 4% equity stake, increasing the U.S. government's ownership to 7% overall.

This agreement is part of a broader deal from last year, which saw U.S. tariffs on Japanese imports reduced from 25% to 15%. In return, Japan commits to investing $550 billion into the U.S. economy.

GlobalFoundries CEO Tim Breen highlighted the significance of this joint venture, stating that it combines the U.S. and Japanese expertise with GlobalFoundries' advanced technology and extensive manufacturing experience. The initiative aims to increase trusted semiconductor capacity in New York. Under the deal, Japan will supply all the capital, while GlobalFoundries contributes its technical know-how and operational capabilities.

The company specializes in creating integrated circuits on silicon wafers to support applications in artificial intelligence, high-performance computing, communications infrastructure, and aerospace and defense sectors.

The initial investment of approximately $10 billion will go towards constructing a new 300mm semiconductor manufacturing plant, which is expected to begin operations in 2029. Further funding of another $10 billion will be allocated for the second fab. The first facility is projected to add around 900,000 of the 300mm wafers annually to U.S. manufacturing capacity, with the second facility adding a similar amount.

Additionally, GlobalFoundries has agreed to modify its existing award under the U.S. Chips Act, reallocating $955 million and speeding up investments in silicon photonics, silicon-germanium, and advanced packaging at its U.S. sites in New York and Vermont.