U.S. Government Takes a Cut of Chip Business in Japan-Funded Deal

For years, the United States has tried to jump-start domestic semiconductor production through a mix of federal grants and loans.The Trump administration is taking a much different approach — channeling foreign money into the sector, and demanding a cut for U.S.

taxpayers in return.The latest example was an unusual agreement for a semiconductor factory in upstate New York that was unveiled this week.Billions of dollars in Japanese funding has been dedicated toward building a facility that will be operated by the U.S.

chipmaker GlobalFoundries.But unlike GlobalFoundries’ other factories in New York, the upstate project will be co-owned by the United States and Japan through a special purpose vehicle.Japanese financing of $10 billion is expected to accelerate the construction of the factory, which will begin producing chips for cars, factories and data centers in 2029.

Another $10 billion could fund a second plant, if the parties later approve it.Call it the financialization of government investment.The Japan tie-up is the brain child of President Trump’s commerce secretary, Howard Lutnick, a New York financier known for pursuing unorthodox and aggressive tactics to amass a fortune.

In Mr.Trump’s second term, Mr.

Lutnick has used the threat of tariffs as a cudgel to drum up big promises of international investment, and turned the Commerce Department into a deal-making operation that wields those funds.With Japan, whose economy depends on exports of cars, technology and steel, Mr.Lutnick and Mr.

Trump offered the country lower tariffs in return for setting up an investment fund that the president could direct toward chosen projects.So far, Japan has agreed to fund a natural gas plant in Ohio, a crude oil export facility along the U.S.

Gulf Coast and a synthetic diamond manufacturing site in Georgia, among other projects related to nuclear energy, critical minerals and other fields.Profits from the New York chip project are expected to be split between th...