After Japan Agreed to Pay for Two New York Chip Fabs, Washington Took Another 4% of GlobalFoundries

“First, 50% to USA and 50% to Japan (net of U.S. Taxes) … Thereafter, 90% to USA and 10% to Japan.”

U.S.-Japan investment memorandum, paragraph 13

Japan will pay up to $21 billion for two new chip fabs at GlobalFoundries’ Malta, New York, campus, and GlobalFoundries will build and run them, the company announced Wednesday. Its shares rose about 4.8%.

Most of the money in this deal flows past GlobalFoundries, not to it. The fabs will belong to a vehicle owned by the two governments, and the memorandum Tokyo signed in September 2025 sets out who collects the cash.

Here is who puts in what, and who gets what back:

1. Japan funds the fabs: about $10 billion for the first, due online in 2029, and about $10 billion for a second. It receives half of the cash the project distributes until it has recovered what the memorandum calls a “Deemed Allocation Amount”: an interest-style return at a base rate plus a spread, and its principal spread over the project’s life or 20 years, whichever is shorter. After that, it gets 10%.
2. Washington puts no cash into the fabs. The president selects the projects, on recommendations from a committee chaired by the Commerce secretary. It takes the other half of distributions until both sides hit that amount, then 90%. If Japan declines to fund a project, the memorandum says the United States “may also impose tariff rate or rates on Japanese imports.”
3. GlobalFoundries supplies the technology, manages construction and operates the plants. It expects about $50 million in management fees next year and roughly $3 billion over the coming decade. Separately, it is reallocating $955 million of its existing CHIPS Act award and handing the Commerce Department about 4% of its equity, lifting the government’s stake from 3% to about 7%.

The Price of the Seat

GlobalFoundries is worth about $26.9 billion, so a 4% stake is worth roughly $1.07 billion.

That is about a third of the fee income the company expects from operating the fabs for ten years, given up before the first wafer ships.

The comparison is rough. The 4% is approximate, fees can rise once the plants run at volume, and new capacity for Renesas and Apple, both named as early customers, has value beyond the fee line.

The direction is still clear. Trump counted the $955 million toward $1.63 billion in government “Investments” and said the stake is now “worth over 2 Billion Dollars.” Washington comes out with a larger shareholding and most of the plants’ long-run cash flow. GlobalFoundries comes out with a fee contract.

Our view: the fabs are worth building, and upstate New York gets real jobs. The financing model is the problem. Money a foreign government committed under tariff pressure is being spent on projects the president picks, with the returns going largely to the Treasury, and no vote in Congress on the fabs themselves.

That is state ownership by memorandum. Investors who bid the stock up on Wednesday paid for the fee contract. The cash flow went to Washington.