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Japan to fund up to $21 billion for two GlobalFoundries chip fabs in New York

The first chip project under Japan's $550 billion US investment pledge pays for mature-node fabs in Malta, New York, while Washington takes a bigger stake in GlobalFoundries itself.

audiotale.net team

· 10 min read

A 300mm silicon wafer patterned with silicon photonics chips, the wafer size the new New York fabs will use
Photo: Ehsanshahoseini, CC BY-SA 4.0, via Wikimedia Commons
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Drafted by the audiotale.net content agent (AI) from the sources it links; an editor checked it before publishing. How we use AI

On this page
  1. What happened
  2. Background
  3. The numbers
  4. What it means
  5. What we don't know yet
  6. What to watch next
  7. Sources

Japan will pay for up to two new chip factories at GlobalFoundries' campus in Malta, New York, in a project worth up to $21 billion that the company and both governments announced on 14 October. It is the first semiconductor project under the $550 billion US investment pledge Japan made last year in return for lower US tariffs. It also shows how that pledge works in practice: Japanese money builds the plants, they will be owned jointly by the US government and Japanese interests, GlobalFoundries runs them for fees, and Washington separately takes a bigger stake in GlobalFoundries itself. The fabs will make mature-node chips for cars, factories, phones and data centres, not leading-edge AI processors.

What happened

GlobalFoundries (GF), the US contract chipmaker, said on 14 October that it had been chosen as the technology provider and operator for two new 300mm fabs at its Malta site in New York's Capital Region. In the company's words, Japan will provide the investment, while GF brings its process technology, manufacturing know-how and day-to-day operations. About $10 billion is meant to speed up the first fab, which GF expects to start building later this year on the existing, already permitted site and to bring online in 2029. Roughly another $10 billion would pay for a second fab. Each is expected to add about 900,000 300mm wafers a year of US capacity when fully running, or about 75,000 a month.

Japan's Ministry of Economy, Trade and Industry (METI), in a release issued jointly with the finance and foreign ministries, describes the same deal more cautiously. It puts the project cost under the initiative at about $10 billion (about ¥1.6 trillion), with construction due to begin by the end of 2026, and says the total could later grow to about $21 billion if production facilities are expanded. In practice, only the first fab is committed so far. Reuters reported that the partners will decide on the second fab before the end of 2028, and GF chief executive Tim Breen told Bloomberg that the second plant depends on market demand.

Two other changes came with the deal. Under a separate agreement, the US Commerce Department will receive equity in GF of about 4%; Breen told Reuters this takes the government's holding from 3% to about 7%. GF also agreed to amend its existing CHIPS and Science Act award and move $955 million of it to silicon photonics, silicon-germanium (SiGe) and advanced packaging at its plants in Malta and in Burlington, Vermont.

GF's announcement included supporting statements from Renesas, Tokyo Electron, Apple, Cirrus Logic and General Motors, as well as Commerce Secretary Howard Lutnick and New York Governor Kathy Hochul. Breen told Reuters that Renesas and Apple are among the first customers. "We definitely would like to give priority to U.S. and Japanese customers," he said. METI named Japanese companies that have shown interest in supplying the project: Tokyo Electron and SCREEN Holdings for manufacturing equipment, Tokyo Ohka Kogyo for materials, Renesas as a buyer of the chips, and two smaller suppliers, Fujikin and Kusakawa Seiki.

"GF was selected because fabs of this scale require more than capital," Breen said in the company's release.

Background

The project comes out of the US-Japan trade framework announced on 22 July 2025, under which the US cut tariffs on Japanese cars and other imports from at least 25% to 15%, according to Reuters. In return, Japan committed to invest $550 billion in the US. A memorandum of understanding signed on 4 September 2025 sets the rules:

  • The US President picks projects recommended by an Investment Committee chaired by the Commerce Secretary, after it consults a joint US-Japan committee.
  • Japan funds each chosen project no sooner than 45 business days after being told, in US dollars, and the investment window runs until 19 January 2029.
  • Each project sits in its own special purpose vehicle, managed by the US.
  • Free cash flow is split 50/50 until each side has received an agreed "deemed allocation amount", then 90% to the US and 10% to Japan.
  • Japan may decline to fund a project, but the US may then raise tariffs on Japanese goods.
  • Japanese suppliers should be chosen over comparable foreign ones where feasible.

Before this project, the two governments had named two batches. On 18 February 2026 they agreed on a synthetic industrial diamond plant (about $0.6 billion), crude oil export infrastructure (about $2.1 billion) and gas-fired power for AI data centres (about $33.3 billion). On 19 March they added small modular reactors in Tennessee and Alabama (up to $40 billion) and gas plants in Pennsylvania (up to $17 billion) and Texas (up to $16 billion). Nikkei reported in September that a GF chip project worth ¥2 trillion to ¥3 trillion was under discussion, according to The Next Web.

The earlier projects show how Japanese money reaches them. For the crude oil project, the Japan Bank for International Cooperation (JBIC), a state-owned lender, signed a loan of about $104 million in April to Japan Invest 2 LLC, a US company set up with equity from JBIC. Private banks joined, for co-financing of about $313 million in total, and the state export insurer NEXI insures the private banks' loans. Japanese trade papers Denpa Shimbun and Nikkan Kogyo report that the chip project will also be financed through JBIC and private banks. Neither government's announcement names the lenders, and we found no loan announcement for this project yet.

On GF's side, the Malta fab has been planned for years. The company's CHIPS Act award of up to $1.5 billion, finalised on 20 November 2024, already included a new fab on the Malta campus, to be built if market conditions and customer demand allowed. In June 2025 GF raised its US investment plan to $16 billion. This year, Commerce agreed to take stakes of about 1% each alongside two CHIPS research letters of intent: $375 million for quantum computing chips in May 2026 and $300 million for silicon photonics in July 2026. GF remains majority-owned by Abu Dhabi's Mubadala, Reuters notes.

The numbers

Projects under the Japan-US Strategic Investment InitiativeUS$ billion, estimated
Projects under the Japan-US Strategic Investment Initiative (US$ billion, estimated)
US$ billion, estimated
Small modular reactors, TN and AL40
Gas power for AI data centres33.3
Chip fabs, Malta, New York (up to)21
Gas power plant, Pennsylvania17
Gas power plant, Texas16
Crude oil export infrastructure2.1
Synthetic industrial diamonds0.6

Source: METI releases of 18 Feb, 20 Mar and 15 Oct 2026

The chip project is the smallest of the three batches, but it is the first outside energy and materials. Counting it at METI's firm $10 billion, the announced projects come to about $119 billion; counted at the $21 billion ceiling, about $130 billion. Either way that is less than a quarter of the $550 billion pledge, with just over two years left in the investment window.

Jobs GlobalFoundries expects from the New York projectjobs
Jobs GlobalFoundries expects from the New York project (jobs)
jobs
Construction and ecosystem jobs27,000
Manufacturing jobs (at least)1,000

Source: GlobalFoundries, 14 Oct 2026

Other figures worth knowing:

  • Up to $21 billion in total, in two steps of about $10 billion each (GF). The two steps add up to about $20 billion; neither release explains the difference.
  • About 900,000 wafers a year per fab when fully running (GF).
  • About 4% of GF to the Commerce Department, taking the government to about 7% (GF, Reuters). President Trump said the government has given GF $1.63 billion in grants and valued the 7% stake at more than $2 billion, Reuters reported.
  • $955 million of GF's CHIPS award moved to silicon photonics, SiGe and packaging (GF).
  • At least 20 years of fees for GF, starting with about $50 million next year for managing construction of the first fab (Reuters, from GF's investor call).
  • Under $1 billion: GF's spending on new plants and equipment last year, against more than $40 billion at TSMC, according to Bloomberg. A $10 billion fab is far beyond what GF has been spending on its own.

What it means

For the chip supply chain. The new capacity is for mature-node chips. Japan's trade minister Ryosei Akazawa said the plants will make 22-nanometre-class chips, Reuters reported. METI says they are for cars, industrial machinery, smartphones and AI data centres. Bloomberg calls them vital but less sophisticated chips and says the aim is to cut US dependence on East Asian suppliers. Renesas said it will treat GF's new New York capacity as an extension of its own production. For Japan, the project also means likely orders for its toolmakers and materials suppliers, which the memorandum's preference for Japanese suppliers is meant to encourage. Breen told Reuters that at least some of Japan's money should flow to equipment makers such as Tokyo Electron.

For GlobalFoundries and the financing model. GF gets new capacity without putting up the capital, earns fees for building and running the plants and for licensing its technology, and keeps control of customer relationships. The Next Web, citing Bloomberg, reported that GF expects about $3 billion of adjusted free cash flow from the arrangement over ten years. Japan supplies the money, and once the agreed amount has been paid back to both sides, 90% of the cash flow goes to the US. Akazawa has rejected criticism that the scheme leaves Japan subservient to the US, saying each project goes through a careful joint review, Reuters reported.

For jobs. GF expects about 27,000 construction and supply-chain jobs and more than 1,000 skilled manufacturing jobs in New York's Capital Region. Reuters ties the 1,000 factory jobs to the first fab alone; GF's release does not split them by fab. GF's release notes that New York supports the region's chip industry through its Green CHIPS programme.

For AI hardware. GF makes mature and specialty chips, not the advanced processors used to train AI models, so these fabs will not make GPUs or AI accelerators. Their link to AI is indirect: METI lists AI data centres among the users of the chips, and Akazawa said that power supply and chip supply decide the race in AI, Reuters reported. The $955 million moved within GF's CHIPS award is more directly tied to AI: GF has said its silicon photonics work is aimed at near-packaged and co-packaged optics for AI infrastructure, which carry data between chips as light. Breen also described tight supply. "Right now, the whole industry is in short supply," he told Bloomberg.

What we don't know yet

  • Who owns what. Reuters says the US government and Japanese interests will own the fabs jointly, and GF says the US takes a stake while Japan provides all the capital. Neither side has published the ownership split or the "deemed allocation amount" for this project.
  • The exact form of Japan's money. Equity, JBIC loans, private bank loans and NEXI insurance all appear in earlier projects, but the mix for this one has not been announced.
  • How big it really gets. METI commits to about $10 billion and calls the rest a possible expansion of production facilities; GF describes a second fab. The second decision is due by the end of 2028.
  • The chip technology. GF's release does not name a process. The 22-nanometre-class description comes from Akazawa, as reported by Reuters.
  • The final terms of the equity deal and the CHIPS amendment. We could not find a Commerce Department release with the details.

What to watch next

  • Groundbreaking. GF says it will announce a ceremony for the first fab separately; METI expects construction to start by the end of 2026.
  • Loan announcements from JBIC and NEXI for the chip project, which would show the real funding mix.
  • The second-fab decision, due before the end of 2028, just weeks before the memorandum's window for new investments closes on 19 January 2029. The first fab is due to open in 2029.
  • More batches. The March joint announcement named small modular reactors, large nuclear reactors and crude oil infrastructure as future candidates.

Sources

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