Huge investment decision of 21 billion dollars for giant chip factories

Japan will invest up to $21 billion for two semiconductor factories to be established in New York, USA.

The facilities will be owned by the US government and the Japanese side, and the operation will be undertaken by chip manufacturer GlobalFoundries.

The step in question forms part of the agreement reached between the Donald Trump administration and Japan last year.

Under the agreement, the Tokyo administration had committed to investing $550 billion in the United States in exchange for the United States reducing customs duties on Japanese automobiles and other imported products from at least 25 percent to 15 percent.

The construction of the first factory is expected to start this year and chip production will start in 2029. It was announced that the final decision on whether the second factory will be established will be made by the partners before the end of 2028.

The first facility, which will reach a production volume of approximately 900 thousand pieces of 300 millimeter wafers per year when operational at full capacity, will be among the largest semiconductor production centers in the USA and will employ more than a thousand people in New York.

All investment capital within the scope of the agreement will be covered by Japan.

The US government's 3 percent stake in GlobalFoundries will increase to approximately 7 percent with the agreement.

US President Donald Trump stated that the value of the 7 percent share reached after the $1.63 billion grant previously provided to the company exceeded $2 billion.

Commenting on the social media platform Truth Social, Trump said, "We were the first administration to turn grants into money for America."

Shares of Malta-based GlobalFoundries, which is majority-owned by Abu Dhabi's wealth fund Mubadala Investment Co, gained more than 4 percent in transactions in New York following the announcement. The annual increase in the company's shares exceeded 39 percent.

According to the Reuters news agency, GlobalFoundries CEO Tim Breen announced that Japanese chip designer Renesas Electronics and Apple were among the first customers of the factories in New York.

At the meeting with investors, it was stated that the company will generate income for at least 20 years thanks to this agreement. It is expected that 50 million dollars will enter the company's coffers next year within the scope of construction management of the first facility.

The company will also use the $955 million grant it previously received from the US administration to accelerate investments in silicon photonics, silicon-germanium chip material and advanced packaging in its existing factories in Malta and Vermont.

Breen stated that part of Japan's capital investment will return to Japanese equipment manufacturers such as Tokyo Electron.

Breen noted that they will establish close cooperation with the Japanese ecosystem, which has strong technologies in the supply chain.

Japan has announced two separate project packages with a total value exceeding $100 billion to date, within the scope of its general investment framework with the USA.

Trump determines the projects to be financed according to the order between the two countries.

Free cash flow from investments will be shared equally between the United States and Japan until a predetermined allocation level is reached; After this stage, 90 percent of the cash flow will be transferred to the USA.

Japanese Minister of Economy, Trade and Industry Ryosei Akazawa said that increasing semiconductor production capacity with the USA is of great importance in strengthening the economic security of both countries.

Rejecting criticism that the investment plan made Japan dependent on the United States, Akazawa stated that the projects were comprehensively inspected by the two countries in terms of financial viability, repayment ability and benefits to Japanese companies.