Japan to invest up to $21 billion in two US chip plants — Channel NewsAsia

Japan will invest up to $21 billion in two semiconductor manufacturing plants in New York state, United States. The facilities will be jointly owned by the US government and Japanese participants, while GlobalFoundries will operate them, Channel NewsAsia reports.

US and GlobalFoundries participation

According to GlobalFoundries, the United States will receive a stake in the new facilities, although Japan will provide all investment capital. The company will receive compensation for the construction and operation of the plants, as well as for licensing chip manufacturing technologies.

Under a separate agreement, the US government will receive 4% of GlobalFoundries shares. As the company’s CEO Tim Breen told Reuters, this will bring the US government’s total stake in the semiconductor manufacturer to about 7%.

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Customers and investment agreement

GlobalFoundries will manage customer relations. According to Breen, Japanese company Renesas Electronics and Apple will be among the first customers of the new plants. He also said that the company seeks to prioritize customers from the United States and Japan, although it expects demand from companies in other countries in the future.

The project is part of an agreement on $550 billion in Japanese investment in the United States, concluded by President Donald Trump’s administration last year. In exchange, the United States reduced tariffs on Japanese cars and other imported goods from at least 25% to 15%.

Japan has already announced two project packages under this scheme worth more than $100 billion in total. Under the mechanism, available free cash flows from investments will initially be split equally between the two countries until a specified distribution level is reached, after which 90% will go to the United States. Breen also said that part of the Japanese investment may return to Japanese suppliers of chip manufacturing equipment, including Tokyo Electron.