Reports indicate that the United States and Japan are in discussions to build a semiconductor factory, a project that would fall under the umbrella of their massive $550 billion investment agreement. The venture, estimated to be worth between 2 trillion and 3 trillion yen (approximately $12.85 billion to $19.27 billion), would be operated by chipmaker GLOBALFOUNDRIES Inc. and focus on logic chips.
If finalized, this would mark the first semiconductor project under the $550 billion framework, representing a significant pivot for an investment program initially dominated by power plant construction. The shift signals a move from energy infrastructure toward advanced technology manufacturing.
The framework for spending the $550 billion was established in July 2025, when Japan committed to investing $550 billion in the U.S. during tariff negotiations, in exchange for the U.S. capping its baseline tariff on Japanese goods at 15%. The agreement, formalized through an executive order signed by President Trump on September 4, outlines a detailed investment mechanism requiring Japan to disburse funds before the end of his term in January 2029.
Under the terms, the U.S. President holds final authority over project allocations, with an investment committee under the Commerce Department providing recommendations and oversight. Each project will be established as a special purpose company, with profits split evenly between the two nations until Japan recovers its capital and interest. After that point, the profit distribution shifts to 90% for the U.S. and 10% for Japan. While Japan retains the right to decline funding for specific projects, the U.S. can retaliate with tariffs on Japanese goods.
The initial two batches of six projects were heavily weighted toward energy and power infrastructure. The largest single undertaking is a 9.2-gigawatt natural gas power plant in Ohio, valued at $33 billion, which will be built on the site of a Cold War-era uranium enrichment facility. Developed by SoftBank's SB Energy, the project has secured a 20-year lease from OpenAI, with Nvidia committing to take over under certain conditions. Once completed, it would be the largest gas-fired power plant in U.S. history, capable of generating enough electricity to power both New York City and Los Angeles combined.
Additional projects include a 5.2-gigawatt facility in Texas and a project in Pennsylvania, both being built by NextEra. These have already received an initial payment of $3.33 billion, which includes $630 million in loans from the Japan Bank for International Cooperation (JBIC) and $1.26 billion from a private banking syndicate led by Citi and JPMorgan, insured by Nippon Export and Investment Insurance (NEXI). The first batch of power is expected to come online by 2028.
The shift toward semiconductors comes amid changing priorities. Japanese Minister of Economy, Trade and Industry, Akazawa Ryosei, met with U.S. Commerce Secretary Howard Lutnick and Trade Representative Greer in Washington in early September. Both sides confirmed progress on the six announced projects and indicated they are selecting a new round of investments. At a press conference on September 4, Akazawa stated that "AI and semiconductor manufacturing will account for a very large proportion going forward." He added that "it will take time to finalize the projects," noting that specific names for the third batch have not yet been announced. The report also mentions that the list of projects under discussion includes a large-scale data center project involving SoftBank Group.
The choice of GLOBALFOUNDRIES Inc. as the operator is noteworthy. The Malta, New York-based foundry exited the advanced process node race in 2018, choosing not to compete with TSMC and Samsung on 2-nanometer technology. Instead, it specializes in differentiated technologies including RF, power management, silicon photonics, and advanced packaging, with facilities in the U.S. (New York and Vermont), Dresden, Germany, and Singapore. It stands out as one of the few pure-play foundries headquartered in the U.S. with substantial domestic production capacity.
In recent months, the company has strengthened its ties with the U.S. government. In 2024, it received $1.5 billion in CHIPS Act funding to expand its existing facilities. On July 29 of this year, it signed a $300 million memorandum of intent with the U.S. Commerce Department to advance silicon photonics, optical materials, and 3D hybrid bonding for advanced packaging, targeting near-package optics (NPO) and co-packaged optics (CPO) for AI data centers. On September 8, it finalized a $375 million agreement for quantum computing R&D, bringing total new government support to $675 million, all allocated by the Commerce Department's chip research office.
Fundamentally, GLOBALFOUNDRIES Inc. is a rare "non-advanced node" beneficiary in the AI narrative. In the second quarter, the company reported revenues of $1.79 billion, up 6% year-over-year, with adjusted earnings per share of $0.46, exceeding market expectations of $0.43. Communication infrastructure and data center revenue surged 62% year-over-year, prompting the company to raise its full-year growth guidance for that segment to 50%-60%. Silicon photonics and silicon germanium capacity are fully sold out through 2027.
However, headwinds remain. Due to memory price increases, the smartphone business is expected to see low double-digit revenue declines for fiscal 2026, while the automotive segment was down 13% quarter-over-quarter in Q2.
There is a noticeable gap between market sentiment and the company's narrative. As of the September 16 close, GLOBALFOUNDRIES Inc. shares were trading at $43.03, roughly flat for the year and near the lower end of its 52-week range of $31.91 to $92.55. The stock has a market capitalization of about $24 billion. In pre-market trading on Thursday, shares were up 2.11% to $43.94. Analysts, however, are more optimistic. According to Investing.com data, 14 of 22 covering analysts rate the stock a Buy with an average price target of $76, implying roughly 70% upside from current levels. TipRanks data shows 8 of 16 analysts rate it Buy and 8 rate it Hold, with an average target of $74.19.
Cantor Fitzgerald analyst C.J. Muse reiterated an "Overweight" rating on September 8 with a $90 price target, citing "foundry capacity tightening with no end in sight." With TSMC raising prices across the board by high single digits and a current supply gap of approximately 15%-20%, Muse notes that GLOBALFOUNDRIES Inc.'s silicon photonics and silicon germanium capacity could support a business scale of roughly $4 billion (currently only $400-$450 million), with an ASP increase effective January 1. Stifel initiated coverage on September 2 with a Buy rating and a $60 price target. Morgan Stanley is more cautious, maintaining a Neutral rating with a $60 target, while UBS, JPMorgan, and Citi all list the stock as Neutral.
Several risk factors warrant attention. First, the news has not been officially confirmed, with no disclosure of the site location, technology node, or the investment ratio between Japan and the U.S. Whether the project will make it onto the official third-batch list remains uncertain. Second, "logic semiconductors" do not necessarily equate to advanced process nodes. GLOBALFOUNDRIES Inc. does not produce 2-nanometer chips. Japan's domestic advanced logic capacity remains tied to Rapidus (in Chitose, Hokkaido, targeting 2nm mass production in H2 fiscal 2027) and TSMC's Kumamoto Plant 2 (upgraded to 3nm with a total investment increased to roughly $17 billion, targeting 2028 production). This project appears more like a combination of "specialty process logic plus U.S. domestic capacity."
Third, there is domestic Japanese criticism of the framework. Nomura Research Institute economist Kichigai Kitaueda has written that the financing structure is "heavily biased toward the U.S." Dennis Wamsted, an analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), has been more blunt, suggesting these power plants "will not be built at the scale advertised," adding that "it's essentially spending other people's money." With the U.S. midterm elections approaching, political and tariff policy uncertainty represents the most significant discounting factor for this $550 billion commitment.