GlobalFoundries to operate two chip plants under $21bn US-Japan deal

GlobalFoundries announced on Wednesday that Japan will invest up to $21 billion in two semiconductor plants in New York state, with GlobalFoundries and the US government will operate the facilities jointly. The company, majority-owned by Abu Dhabi’s Mubadala Investment Company, revealed the plan as part of a broader US-Japan economic agreement.

Japan finances $21bn New York chip plants

Under the deal, Japan will provide all capital for the two fabrication units, while GlobalFoundries contributes its technological expertise, manufacturing know-how and operational capabilities. The investment stems from a pact struck last year that lowered US tariffs on Japanese imports from 25% to 15% and committed Japan to investing $550 billion in the US economy.

“This is a bold new initiative for semiconductor manufacturing, bringing together the United States and Japan with GF’s differentiated technology and GlobalFoundries’ decades of manufacturing expertise to accelerate trusted capacity in New York,” said Tim Breen, GlobalFoundries CEO.

US government to hold 7% equity stake

In a separate agreement, the US Commerce Department will acquire a 4% equity interest in GlobalFoundries, raising the US government’s total holding to 7%, Breen told Reuters. GlobalFoundries is controlled by Abu Dhabi’s Mubadala Investment Company, which retains majority ownership.

GlobalFoundries shares rose 4.9% to $48.99 each as of 10:00 ET. The company produces integrated circuits on silicon wafers engineered for artificial intelligence, high-performance computing, communications infrastructure, and aerospace and defence applications.

Initial $10bn for first fab, second fab to follow

The deal includes an initial $10 billion to boost construction of a new 300mm semiconductor manufacturing plant, or fab, expected to become operational in 2029, plus an additional $10 billion to fund a second fab. GlobalFoundries said the first fab will add about 900,000 300mm wafers to annual US manufacturing capacity when fully operational, with the second factory adding a similar volume.

GlobalFoundries also agreed with the Commerce Department to amend its existing Chips Act award to reallocate $955 million to accelerate investments in silicon photonics, silicon-germanium and advanced packaging at its sites in New York and Vermont. The announcement follows roughly a week after GlobalFoundries announced a $2 billion manufacturing agreement with TSMC.