The United States and Japan have reached an agreement to jointly fund a semiconductor manufacturing facility in upstate New York, marking a notable shift in U.S. efforts to boost domestic chip production. The facility, operated by U.S. chipmaker GlobalFoundries, is set to begin producing chips for automotive, industrial, and data center applications by 2029.

The project involves $10 billion in Japanese financing for the first phase, with an additional $10 billion potentially allocated for a second plant pending further shareholder approval by the end of 2028. Unlike previous U.S. semiconductor initiatives primarily funded by domestic grants and loans, this deal features a co-ownership structure between the U.S. and Japanese governments through a special purpose vehicle. Profits are expected to be split between the two countries, alongside fees paid to GlobalFoundries for technology use and plant operations.

The agreement emerged from the Trump administration’s novel approach to industrial investment, led by Commerce Secretary Howard Lutnick. Known for his unorthodox strategies, Lutnick capitalized on the threat of tariffs to negotiate significant foreign investment commitments from countries such as Japan, South Korea, and Taiwan. In exchange for lower tariffs, Japan has agreed to fund several projects in the United States, including a natural gas plant in Ohio, a crude oil export facility on the Gulf Coast, and the semiconductor factory in New York.

GlobalFoundries, whose majority ownership lies with the Abu Dhabi sovereign wealth fund, had previously sought to expand its production capacity independently. According to CEO Tim Breen, the company was encouraged by U.S. officials to “think bigger,” resulting in the two-phase expansion plan. GlobalFoundries officials view the investment positively, as it enables the firm to offer domestically produced chips to customers without absorbing the full capital costs.

Japanese representatives highlighted the use of Japanese manufacturing equipment in the facility, with some output intended for a Japanese technology corporation, underscoring the collaboration’s bilateral economic ties. U.S. officials characterized Japan’s financial contribution as beneficial to American taxpayers, emphasizing that the arrangement allows for increased chip production capacity in the United States without direct government expenditure.

Secretary Lutnick also noted that while President Trump had not finalized plans for the U.S. government’s equity stake in GlobalFoundries resulting from the deal, he personally favored channeling these shares into tax-advantaged accounts for children, known as Trump accounts.

The U.S.-Japan semiconductor partnership forms part of a broader strategy by the Trump administration to attract hundreds of billions in foreign investment into critical sectors. Lutnick cited commitments exceeding $1.4 trillion from Japan, South Korea, and Taiwan toward domestic semiconductor manufacturing, calling the scale of these investments unprecedented.

With the first phase of the New York project underway, all parties expressed optimism about advancing the facility’s development. The potential second phase remains subject to a final decision, indicative of cautious but forward-looking collaboration between the United States and Japan in the strategic semiconductor industry.