GlobalFoundries (GF) has been selected as the technology partner for a $21 billion US-Japan semiconductor initiative, which will see the chipmaker build and operate two new fabs at its Malta, New York, site.

Under the terms of the agreement, Japan will provide the investment, with an initial $10bn to support the construction of a new 300mm fab, slated to come online in 2029.

According to GF, the site of the first fab is permitted and “shovel-ready,” with the company expecting to break ground later this year.

Following this, an additional $10bn investment package would be used to fund a second fab, adding “significant new US manufacturing capacity” that will allow GF to continue supporting its global customer base, the company said in a statement.

Once complete, both facilities are expected to have an annual production capacity of around 900,000 300mm wafers. The project will create approximately 27,000 construction and ecosystem jobs, and more than 1,000 high-skilled manufacturing jobs around New York City, GF said.

As part of the deal, GF has also agreed with the US Department of Commerce to amend its existing CHIPS and Science Act award, reallocating $995 million into the development of silicon photonics, silicon-germanium (SiGe), and advanced packaging at its facilities in Malta, New York, and Burlington, Vermont.

The chipmaker added that as part of a separate agreement, the US Department of Commerce will receive a four percent equity stake in GF.

“This is a bold new initiative for semiconductor manufacturing, bringing together the United States and Japan with GF’s differentiated technology and decades of manufacturing expertise to accelerate trusted capacity in New York,” said Tim Breen, CEO of GlobalFoundries.

“GF was selected because fabs of this scale require more than capital. They require differentiated technology, operational excellence, and a proven ability to execute. That combination is what positions GF to make this first-of-its-kind initiative a success.”

Secretary of Commerce Howard Lutnick added: “President Trump’s historic US-Japan Trade Deal is delivering another massive manufacturing investment into America. With Japan’s investment funding and GlobalFoundries’ partnership, two large semiconductor chip manufacturing facilities will be built in the US, creating thousands of high-paying jobs for American workers."