Updated Version 4 - Japan will invest up to $21 billion in two chip factories of GlobalFoundries located in New York

Comments from the Japanese Minister of Economy, Trade and Industry have been added in paragraphs 16 and 17.

Stephen Nellis/David Shepardson/Makiko Yamazaki

Reuters New York/Washington/Tokyo, October 15 - Japan will invest up to $21 billion to build two chip factories in the state of New York. These factories will be jointly owned by the U.S. government and Japanese investors, and operated by GlobalFoundries (GFS.O), the company said on Wednesday.

The plan is part of a deal reached by the Trump administration (link) last year, under which Japan will invest $550 billion in the United States in exchange for the U.S. lowering tariffs (link) on Japanese automobiles and other imports from at least 25% to 15%.

GlobalFoundries, headquartered in Malta, New York, is controlled by the Abu Dhabi sovereign wealth fund Mubadala Investment Co. Its shares rose more than 4% in afternoon trading and are up over 39% year-to-date.

The first factory is scheduled to break ground this year and is expected to begin production in 2029. GlobalFoundries executives said the partners would decide by the end of 2028 whether to build a second facility.

The first factory is expected, when fully operational, to add about 900,000 units of 300mm wafer annual capacity in the United States, placing it among major U.S. semiconductor manufacturing facilities and creating over 1,000 factory jobs in New York.

Previously, the U.S. government held a 3% stake in GlobalFoundries. CEO Tim Breen told Reuters that this would rise to 7%. Under the agreement, the entire investment will be provided by Japan.

U.S. President Donald Trump stated on the "Truth Social" social platform that the U.S. government had previously provided $1.63 billion in grants to the company, and at present the 7% equity stake is valued at more than $2 billion.

"We are the first administration in history to convert grants into U.S. returns," Trump said.

Breen told Reuters that initial customers for the New York plant included Japanese chipmaker Renesas Electronics (6723.T) and iPhone manufacturer Apple (AAPL.O).

On a call with investors, executives said the new deal would bring management fee income to the company for at least the next 20 years. That income is expected to reach $50 million next year, as the company will receive management fees for overseeing the construction of the first factory.

GlobalFoundries will use $955 million in previously allocated U.S. government funds to accelerate investments in silicon photonics, silicon germanium chip materials, and advanced packaging at its existing chip plants in Malta, New York, and Burlington, Vermont.

Breen of GlobalFoundries stated that at least part of Japan's invested capital would flow back to chip manufacturing equipment suppliers, such as Tokyo Electron (8035.T) and other Japanese companies that share the supply chain leadership with U.S. competitors.

"Clearly, we very much hope Japanese equipment suppliers will participate," Breen said. "We’ll keep an open mind, but we’ll certainly work deeply with the Japanese industry ecosystem, as they possess outstanding technology."

So far, Japan has announced two batches of projects under the overall investment plan, exceeding $100 billion in total value.

According to the agreement with the U.S., Trump will select the projects funded by Japan. The resulting available free cash flow will be split equally between the two countries (link) until a specific allocation agreement is reached, after which 90% will go to the United States.

"We believe that working with the United States to expand semiconductor production capacity is extremely important for strengthening the economic security of both countries," Japan's Minister of Economy, Trade, and Industry, Yoshinari Akazawa, told reporters on Thursday.

He dismissed criticism that the investment plan would make Japan subservient to the U.S., stating that relevant projects would undergo strict bilateral review to ensure their financial viability, repayment ability, and benefits for Japanese companies.

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