Japan to Fund Two Chip Plants Operated by GlobalFoundries With Up to $21 Billion
Key Facts
GlobalFoundries has been selected to operate two new chip plants in New York state under a U.S.-Japan initiative involving Japanese investment of up to $21 billion, according to Reuters via Investing.com. The selection includes providing manufacturing technology and operational capabilities for the two plants at the Malta site, where the company will take on the project's industrial role. Japan will provide the investment capital, while GlobalFoundries will contribute its manufacturing expertise alongside technology and operations, according to Investing.com. The two plants will be jointly owned by the U.S. government and Japanese interests, according to Reuters. The initiative will allow the company to earn revenue from fees for building and operating the plants, as well as licensing the chip manufacturing technology used in them.
The initial investment allocated to building the first plant is about $10 billion, according to funding details reported by Investing.com. The project includes additional funding of about $10 billion for the second plant as part of the planned expansion in New York. These investments fall under a broader Japanese pledge to invest $550 billion in the U.S. economy, according to The National. The announced industrial funding is earmarked for chip plants that will use GlobalFoundries' technology and operate under its management. The project's arrangements thus combine Japanese capital, the company's manufacturing expertise and joint ownership of the facilities by the U.S. side and Japanese interests.
Once fully operational, the first plant is expected to add annual manufacturing capacity of about 900000 silicon wafers, according to Investing.com. The silicon wafers to be manufactured under the expansion will have a diameter of 300 millimeters, according to details of the project's production capacity. On employment, the project is expected to create about 27000 jobs in construction and the industrial ecosystem surrounding the plants. It will also add more than 1000 manufacturing jobs in New York state's Capital Region, where the planned industrial expansion is located. The expected jobs therefore span facility construction and related industrial activities through to manufacturing once the project begins operations.
Under a separate agreement, the U.S. Commerce Department will receive a stake of about 4% in GlobalFoundries, according to The National. Chief Executive Tim Breen told Reuters that the U.S. government's total stake in the company would rise to 7% after the agreement. Abu Dhabi's Mubadala Investment Company owns a majority stake in the company, which will provide the technology and operational expertise for the new plants. GlobalFoundries shares rose 4.9% in morning trading on the day of the announcement, according to The National's report on the initiative. The morning gains came as the company announced its role in the industrial expansion and arrangements to increase the U.S. government's equity stake.
In another funding development, GlobalFoundries agreed with the U.S. Commerce Department to reallocate $955 million from its existing CHIPS Act grant, according to The National. The reallocation aims to accelerate the company's investments in silicon photonics, silicon germanium and advanced packaging technologies. These investments cover the company's activities in New York and Vermont, according to details of the amended grant agreement. Company executive Ed Kaste said, "Advanced packaging is becoming increasingly important to achieving the performance, energy efficiency and scale required for next-generation AI systems." Kaste's statement links the development of this technology to AI systems' requirements for performance, energy efficiency and scalability.
The initiative was preceded by the announcement of a $2 billion manufacturing agreement between GlobalFoundries and Taiwan Semiconductor Manufacturing Company, according to The National. The agreement covers the supply of silicon interposers that help chips communicate, as part of the company's manufacturing components business related to advanced packaging. The agreement has an initial term of 5 years, according to details of the industrial arrangement reported by Investing.com. It includes provisions for future production capacity expansion alongside the manufacturing scope covered by its initial term. Its implementation includes the Malta site, which will also host the two new plants covered by the U.S.-Japan initiative, with the site's plans spanning silicon interposer production and expanded chip manufacturing.
On the implementation timeline, GlobalFoundries expected construction of the first plant at the Malta site to begin during the remainder of 2026, according to Investing.com. The manufacturing agreement with Taiwan Semiconductor Manufacturing Company targets the start of a volume production ramp-up for silicon interposers in the first half of 2028. The first plant under the U.S.-Japan initiative is expected to begin operations in 2029, according to the project's announced schedule. The target date for ramping up silicon interposer production therefore precedes the new chip plant's entry into service. The site's announced timeline progresses from the start of construction to increased component production and then the operation of the plant funded under the initiative.