Japan to invest up to USD21bn in two US chip factories to be run by GlobalFoundries

Japan plans to invest up to $21 billion in two chip manufacturing facilities in New York State, operated by GlobalFoundries, according to a statement released on Wednesday. These factories will be jointly owned by the US government and Japanese entities. This investment is part of a broader deal worth $550 billion, agreed upon last year by President Donald Trump's administration.

The deal involves lowering tariffs on Japanese cars and other imports from the US, reducing them from 25% to 15%. Japan will be responsible for the entire investment capital, while the US will hold a stake in the factories. GlobalFoundries, which is majority-owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, will generate income from the construction and operation of the plants, as well as through technology licensing.

Additionally, the US government will acquire a 4% stake in GlobalFoundries, increasing its ownership to approximately 7%. Tim Breen, CEO of GlobalFoundries, revealed that Japan's Renesas Electronics and Apple, the iPhone manufacturer, will be among the initial customers for the New York facilities. Breen expressed that the company aims to prioritize US and Japanese customers, though other non-US and non-Japanese firms will eventually join the demand.

Under the agreement with the US, projects selected by President Trump will receive funding from Japan. The profits generated from these investments will be shared equally between the two nations until a specific allocation point is reached. After that, 90% of the profits will be directed to the US. Breen emphasized the importance of engaging with Japanese equipment suppliers, such as Tokyo Electron and other Japanese firms, as they dominate the supply chain in the chip manufacturing industry.