Japan backs New York chip factory investment with GlobalFoundries

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Japan backs NY chip factory

Highlights

Japan will provide all capital for two New York chip factories jointly owned with the U.S. as part of a $550 billion investment deal.
GlobalFoundries will earn fees from building and operating the plants, license technology, and the U.S. has increased its GlobalFoundries stake to about 7%.
Free cash flow from these projects will be split evenly between Japan and the U.S. until a target is met, after which 90% goes to the U.S.

Ownership structure and project funding

As reported by Reuters, citing GlobalFoundries, Japan is set to provide all of the capital for the two New York chip factories, while the U.S. government will hold a stake alongside Japanese interests in the facilities. The company says the plan forms part of a $550 billion U.S. investment deal agreed with Japan last year, under which Washington lowered tariffs on Japanese cars and other imports to 15% from at least 25%.

GlobalFoundries, which is majority-owned by Mubadala Investment Co of Abu Dhabi, says it will earn fees from constructing and operating the plants, as well as from licensing chip manufacturing technology to them. In a separate agreement, the U.S. government is also taking a 4% stake in GlobalFoundries, lifting its total holding in the chipmaker to about 7%, Chief Executive Tim Breen tells Reuters.

Breen says GlobalFoundries will manage customer relationships for the new facilities. He adds that initial customers include Japan's Renesas Electronics and Apple, and says the company would like to give priority to U.S. and Japanese buyers before finalizing longer-term allocation of production capacity.

Supply chain effects and returns split

Japan has so far announced two batches of projects worth more than $100 billion combined under the wider investment program. Under the arrangement, President Trump selects projects to be funded by Japan, and free cash flows from the investments are split evenly between the two countries until a specified allocation is met, after which 90% goes to the U.S.

Breen says at least part of the Japanese capital committed to the chip plants is likely to flow back to semiconductor equipment makers such as Tokyo Electron and other Japanese companies. He says GlobalFoundries has a strong interest in involving Japanese equipment suppliers, while remaining open to broader participation across the chip manufacturing supply chain.

In our earlier article on Malaysia’s Budget 2027 semiconductor push, we explained how the government earmarked major funding to help local chip firms move beyond assembly and testing into higher-value areas such as integrated circuit design. We also noted the focus on strengthening domestic supply chains, accelerating project implementation, and ensuring productivity gains translate into broader economic benefits, including higher wages.

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