Japan will put up as much as $21 billion for two semiconductor factories in New York state, GlobalFoundries said on Wednesday. The plants will be owned jointly by the US government and Japanese interests, while GlobalFoundries, majority owned by Abu Dhabi’s Mubadala Investment Co, builds and operates them, earning fees for construction and operations and for licensing its manufacturing technology into the venture.
The money comes from the framework agreed last year under which Japan committed to invest $550 billion in the United States after Washington lowered tariffs on Japanese cars and other imports from at least 25 percent to 15 percent. Tokyo has now announced two batches of projects under the scheme worth more than $100 billion combined. Under the arrangement, the US president selects the projects Japan funds, and free cash flow is split evenly between the two countries until an allocation threshold is reached, after which 90 percent goes to the United States.
Washington is taking equity at two levels. It will hold a stake in the new factories, for which Japan supplies all the investment capital, and in a separate agreement it will take a 4 percent stake in GlobalFoundries itself, lifting its total holding in the chipmaker to about 7 percent, chief executive Tim Breen told Reuters. GlobalFoundries will manage customer relationships, with Japan’s Renesas Electronics and Apple named as initial customers, and Breen said US and Japanese customers would get priority, with Japanese equipment suppliers such as Tokyo Electron expected to share in the spending. The company’s shares rose more than 4 percent in early trading.