Japan to fund up to $21 billion for two New York chip fabs run by GlobalFoundries, as Commerce takes about 4% of GF

GlobalFoundries said Wednesday, Oct. 14, it has been selected to operate two new semiconductor plants at its Malta, New York, site, funded by up to $21 billion from Japan under a U.S.-Japan initiative, according to the company’s press release. In a separate agreement, the U.S. Commerce Department will receive equity in GF of approximately 4%.

“Japan will provide the investment,” the release says, while GF contributes “its differentiated technologies, manufacturing expertise and proven operational capabilities as technology provider and operator.”

About $10 billion goes toward a first fab, short for fabrication plant, the factory where chips are etched onto silicon wafers. It is expected to come online in 2029 and add about 900,000 wafers a year at the 300-millimeter size. A second $10 billion would fund another fab of roughly the same capacity. GF says the project should create about 27,000 construction and related jobs and more than 1,000 manufacturing jobs in New York’s Capital Region.

The grant money moves

GF also agreed with Commerce to amend its existing CHIPS and Science Act award, moving $955 million toward silicon photonics, silicon-germanium and advanced packaging at its plants in Malta and Burlington, Vermont. Those are technologies used in communications gear and data centers, the release says.

Because of the Japanese money, that federal funding “will now go to investments in other areas to advance semiconductor manufacturing,” GF spokesperson Kenneth Craig told the Associated Press.

The Commerce stake follows a pattern. The U.S. government will receive shares in GF just as it did with Intel, AP reported, part of a broader policy of taking ownership stakes in private companies.

“GF was selected because fabs of this scale require more than capital,” CEO Tim Breen said in the release. “They require differentiated technology, operational excellence and a proven ability to execute.”

Three parties, three roles

Most chip plants come as a package: the company that runs the line usually raises the money too. This one is split three ways. Japan supplies the capital. GF supplies the process technology and runs the plants. The Commerce Department takes equity in GF.

The party contributing technology and operations lists no construction cost of its own, and the public side’s return in the same announcement arrives as a piece of the operator, about 4% of GF.

A chipmaker that pays for its own fabs is selling wafers and carrying the bill for the buildings that make them. Here, according to the release, GF’s contribution is what it knows how to do, and the capital that usually decides who builds a fab comes from somewhere else.

For Commerce, the arrangement replaces part of a grant relationship with an ownership one: the new plants are funded by Japan, and the government ends up holding shares in the company that runs them. The release doesn’t say what the stake is priced at or how the shares will be issued.

What the customers said

The release carried supporting quotes from Renesas, Apple, Cirrus Logic and General Motors, which buy the kinds of chips GF makes for cars, industrial equipment and connected devices. Demand for chips has surged with artificial intelligence and data-center computing, AP noted, and TSMC said in July it plans to spend another $100 billion expanding in the U.S.

New York Gov. Kathy Hochul called the project “a tremendous vote of confidence” in the state’s workforce, and New York continues to support the region through its Green CHIPS program, according to the release.

GF expects to break ground on the first fab at Malta later this year, on a site it describes as permitted and shovel-ready, using infrastructure already in place there.