Japan to Fund Up to $21 Billion for Two GlobalFoundries Chip Fabs in New York

Japan will provide up to $21 billion to build two semiconductor factories at GlobalFoundries’ site in Malta, New York, the first chip project under the $550 billion investment pledge Tokyo made to Washington in exchange for lower U.S. tariffs. GlobalFoundries announced the deal on Wednesday, Oct. 14, and Japan’s government confirmed it the next day. The Japan GlobalFoundries investment is the largest single semiconductor project yet tied to last year’s trade agreement.

The Japan GlobalFoundries deal at a glance

• Size: About $10 billion (roughly 1.6 trillion yen) for the first fab, with a second fab of about $10 billion that would bring the total to roughly $21 billion, according to Japan’s Ministry of Finance and the GlobalFoundries announcement.
• Start: Construction of the first fab is due to begin later in 2026. The site is already permitted.
• End: Chip production at the first fab is expected in 2029. The partners will decide whether to build the second fab before the end of 2028, GlobalFoundries executives said, according to Reuters.
• Who pays and owns: Japan provides all of the capital. The factories will be held by a special-purpose company set up by the two governments, Nikkei reported, with funding from the Japan Bank for International Cooperation and private banks backed by guarantees from Nippon Export and Investment Insurance. GlobalFoundries will build and run the plants as operator.
• Capacity and jobs: Each fab is designed to add about 900,000 300 mm wafers a year. GlobalFoundries expects about 27,000 construction and supply-chain jobs and more than 1,000 manufacturing jobs in New York’s Capital Region.

How the deal fits the $550 billion trade pact

The project comes under the “Strategic Investment Initiative” in the U.S.-Japan trade framework announced on July 22, 2025. Under that deal, Washington cut tariffs on Japanese cars and other imports from at least 25% to 15%, and Japan agreed to finance up to $550 billion of U.S. projects. A memorandum of understanding signed on Sept. 4, 2025, sets a deadline of Jan. 19, 2029, for the investments.

The memorandum gives the U.S. side control over project selection. An investment committee chaired by the U.S. commerce secretary recommends projects and the president chooses them, after consultation with Japan. Japan then has 45 business days to fund each one. Cash flow from the projects is split evenly until Japan recovers its investment, after which 90% goes to the United States.

The first batch of projects, agreed on Feb. 18, totaled about $36 billion: a roughly $33.3 billion natural gas power project to supply AI data centers, a $2.1 billion crude oil export facility and a $600 million industrial synthetic diamond plant, located in Ohio, Texas and Georgia, respectively, according to Japan’s Foreign Ministry and Reuters. With the chip fabs, the Japanese government counts seven projects worth a combined $119 billion under the framework, Nikkei reported.

What changes for GlobalFoundries and Washington

GlobalFoundries, which is majority-owned by Abu Dhabi’s sovereign wealth fund Mubadala, will earn fees for at least 20 years, executives told investors. They put the fees at about $50 million next year, when the company manages construction of the first fab. Its shares rose more than 4% on Oct. 14, Reuters reported.

The company also agreed with the U.S. Commerce Department to amend its existing CHIPS and Science Act award, shifting $955 million toward silicon photonics, silicon-germanium and advanced packaging at its plants in Malta and in Burlington, Vermont. In a separate agreement, the department will receive about 4% more of the company’s equity. Chief Executive Tim Breen told Reuters that will raise the government’s stake from 3% to 7%. President Donald Trump wrote on Truth Social that the government, which gave the company $1.63 billion in grants, values the 7% stake at more than $2 billion.

Impact on chip supply chains and Japanese suppliers

The fabs will make mature-node chips used in cars, industrial machinery, smartphones and AI data centers, Japan’s Ministry of Finance said. Such chips are less advanced than the processors used to train AI models, but shortages of them halted auto production lines around the world in 2021.

Japan’s government listed companies that have shown interest in supplying the project: Tokyo Electron and SCREEN Holdings for manufacturing equipment, Tokyo Ohka Kogyo for materials, and smaller firms Fujikin and Kusakawa Seiki for parts. Renesas Electronics has said it plans to buy output. Breen told Reuters that early customers include Renesas and Apple, and that the company would “definitely engage very much with the Japanese ecosystem.” Cirrus Logic and General Motors, both existing GlobalFoundries customers, also welcomed the new capacity in statements. The deal comes alongside other U.S.-Japan economic and security moves, including the yen’s slide and the two countries’ currency pact and the Keen Sword 27 military exercise.

Reactions

“President Trump’s historic U.S.-Japan Trade Deal is delivering another massive manufacturing investment into America,” Commerce Secretary Howard Lutnick said in the company’s announcement.

“GF was selected because fabs of this scale require more than capital,” Breen said. “They require differentiated technology, operational excellence and a proven ability to execute.”

Japan’s economy, trade and industry minister, Ryosei Akazawa, told reporters on Oct. 15: “We believe that working together with the US to expand semiconductor production capacity is highly significant for enhancing the economic security of both countries.” He rejected criticism that the initiative makes Japan subservient to the United States, saying projects go through rigorous bilateral reviews to make sure they are financially viable, can be repaid and benefit Japanese companies, Reuters reported.

New York Gov. Kathy Hochul called the expansion “a tremendous vote of confidence in New York’s world-class workforce.” Trump wrote on Truth Social: “We are the first administration ever to turn grants into money for America.”

For more on the alliance and the wider region, visit The Boston Report’s Geopolitics hub.

Featured photo: The entrance to GlobalFoundries’ chip plant in Dresden, Germany, in August 2022. The new Japan-funded fabs will be built at the company’s Malta, N.Y., site. Photo by Albrecht Voß, CC BY-SA 4.0, via Wikimedia Commons (cropped).

Sources

• GlobalFoundries (SEC filing): GlobalFoundries selected to operate two new semiconductor fabs in New York under landmark U.S.-Japan initiative
• Reuters (via Investing.com): Japan to invest up to $21 billion in two GlobalFoundries chip factories in New York
• Japan Ministry of Finance: Semiconductor manufacturing project under the Japan-U.S. Strategic Investment Initiative (Japanese)
• Nikkei: 1.6 trillion yen for chip plant, third round of U.S. investment (Japanese)
• Cabinet Secretariat of Japan: U.S.-Japan Memorandum of Understanding on strategic investment (PDF)
• Ministry of Foreign Affairs of Japan: First Batch of Projects under the Japan-U.S. Strategic Investment Initiative
• Reuters: Trump says Japan to invest in energy, industrial projects in Ohio, Texas and Georgia
• Investing.com: Japan, U.S. reach first chip deal under $550 bln investment plan