GlobalFoundries will run two new New York chip plants funded by up to $21 billion from Japan, earning fees and a share of the plants' earnings without owning them. The U.S. Commerce Department is taking a further equity stake of about 4%, on top of the roughly 3% it already holds.
The headline figure is $21 billion. Almost none of it belongs to GlobalFoundries.
GlobalFoundries said Wednesday it had been selected as technology provider and operator for two new semiconductor fabs at its Malta, New York, campus under a U.S.-Japan initiative providing up to $21 billion. "Japan will provide the investment," the company said, while GlobalFoundries contributes technology, manufacturing know-how and operations. The plants sit in a separate vehicle jointly owned by U.S. and Japanese interests.
About $10 billion will fund a first 300-millimeter fab expected online in 2029, adding roughly 900,000 wafers a year of capacity when fully operational. A further $10 billion "would fund a second fab."
In a separate agreement, the Commerce Department "will receive equity in GF of approximately four percent," the company said. It did not disclose the number of shares or what, if anything, the government is paying. The government already held about 3% of the company, and Chief Executive Tim Breen said in an interview that the new stake takes total U.S. ownership to about 7%.
The three ledgers
Investors need to separate three sets of books.
The first is Japan's: the capital for two fabs, placed in a vehicle the two governments own.
The second is GlobalFoundries'. On an investor call Wednesday, management said the company will earn construction and operations management fees, technology fees and a share of the vehicle's future earnings before interest, taxes, depreciation and amortization. It projected earnings-per-share accretion of 10 to 15 cents in 2027, rising to 50 to 75 cents over the long term, and about $3 billion of cumulative free cash flow over 10 years. Under an amended CHIPS Act award, which reallocates up to $955 million without increasing the total, GlobalFoundries also agreed to raise its own capital investment in its existing Malta and Burlington, Vermont, facilities to $5 billion.
The third is the shareholders'. A 4% stake on roughly 549 million shares outstanding works out to about 22 million shares, worth around $1.07 billion at Wednesday's close. Whether that stake is newly issued, and therefore dilutive, has not been disclosed. The last one was: in September, GlobalFoundries agreed to issue the Commerce Department 9.9 million new shares at $37.85 each.
The tape
GlobalFoundries shares touched $53.41 in thin premarket trading after the 8:30 a.m. announcement. The regular-session high was $49.80, and the stock closed at $48.94, up 4.8%. The iShares Semiconductor ETF fell 4.5% the same day, leaving the stock roughly nine percentage points ahead of its sector. Customers named in the announcement, including Apple, Cirrus Logic and General Motors, barely moved.
The debate
The bullish view is that a sub-scale foundry has found a capital-light way to add large New York capacity, collecting fees and a share of the plants' EBITDA on someone else's capital, with Renesas, Apple, Cirrus Logic and GM named as customers.
The skeptical view is that GlobalFoundries has handed the government a further permanent claim of about 4%, taking it to about 7%, for an income stream that starts small in 2027, depends on plants that do not exist until 2029, and leaves ownership of the new capacity with two governments. Management said it does not expect any further U.S. equity participation beyond this deal.
What to watch
A filing that sets the share count and price of the Commerce stake, the vehicle's fee and profit-share terms, the groundbreaking the company expects later this year, and third-quarter results on Nov. 4.