The factory will be located at GlobalFoundries' "Fab 8" site in upstate New York, where its headquarters moved from California earlier this year. The new factory will double the site's chipmaking capacity and add 1,000 jobs.
Following the successful investment model of Fab 8, GlobalFoundries said that it was planning to fund the new facility through private-public partnerships including customers, federal and state investments.
GlobalFoundries is also planning to spend an additional $1 billion to boost existing output by up to 150,000 wafers per year.
This new capacity will serve the growing demand for secure, feature-rich chips needed by high-growth markets including automotive, 5G connectivity and IoT.
The news comes as the current semiconductor shortage is having a severe impact on industries around the world and a day after it was revealed that Intel is in talks to acquire GlobalFoundries in a deal that could be worth up to $30bn.
If Intel was to acquire the foundry it would help it to ramp up production of chips at a time when it is looking to start producing chips for car makers that have struggled to keep operations running due to chip shortages.
