“Right now, the whole industry is in short supply,” GlobalFoundries CEO Tim Breen told Bloomberg.
Japan will put up to $21bn into two new chip factories at GlobalFoundries’ site in Malta, New York, the company announced on 14 October. GlobalFoundries (GF) will run both plants as technology provider and operator. The money comes from Japan’s $550bn investment pledge to the US, made under its trade deal with the Trump administration.
In a separate agreement, the US Commerce Department will receive about 4% of GF’s equity. Breen told Reuters that the government’s stake will rise from 3% to 7%. The US government and Japanese interests will jointly own the factories themselves, Reuters reported. Nikkei reported the talks in September.
One fab now, one later
About $10bn will speed up construction of a first 300mm fab, due to come online in 2029, GF said. Another $10bn or so would fund a second. GF expects to break ground on the first later this year. Executives told investors the partners will decide on the second before the end of 2028, according to Reuters.
“Of course, it will be market-dependent,” Breen told Bloomberg. “We’re not going to do it if the market isn’t there, but every indicator I see today is flashing green around market demand.”
Each fab would add about 900,000 300mm wafers of annual US capacity. GF expects the project to create about 27,000 construction and ecosystem jobs and more than 1,000 manufacturing jobs. The plants will make chips for cars, industrial systems and communications networks. Breen told Reuters that early customers include Renesas and Apple.
What GF gets
GF will earn fees from the deal for at least 20 years, executives said on an investor call, Reuters reported. Those fees should bring in $50m next year, when GF manages construction of the first fab. The company expects about $3bn in adjusted free cash flow from the deal over 10 years, Bloomberg reported.
GF will also move $955m of its existing CHIPS Act award into silicon photonics, silicon-germanium and advanced packaging. That money goes to its plants in Malta and in Burlington, Vermont.
President Donald Trump said on Truth Social that the government’s 7% stake is worth more than $2bn, Reuters reported. The government had given GF $1.63bn in grants. The government also holds a stake in Intel, built by turning CHIPS Act grants into equity. Abu Dhabi’s sovereign wealth fund Mubadala owns nearly three-quarters of GF, according to Bloomberg.
Japan’s side
Under the framework, the Trump administration picks the projects and Japan can decline one that lacks commercial viability, Bloomberg reported. Washington takes 90% of the profits once Japan recoups its principal and interest. Japanese Trade Minister Ryosei Akazawa rejected criticism that the scheme makes Japan subservient to the US, Reuters reported. Projects go through rigorous bilateral reviews, he said.
“In the competition surrounding AI, they say that the ability to supply electricity and semiconductors will determine the outcome,” Akazawa told reporters in Tokyo, according to Bloomberg.