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U.S. Gives GlobalFoundries $1.5 Billion to Accelerate Domestic Semiconductor Industry

semiconductors, supply chain, domestic supply, funding

When it comes to technological advances, the small things frequently have the biggest impact.

And for the 21st century’s connected economy, there is no bigger, smaller thing than semiconductors — the preeminent component of the computer chips powering electronic devices and digital transformations that have defined, accelerated, and made scalable nearly every major innovation across communications, computing, healthcare, payments, transportation and other sectors.

This, as the U.S. Department of Commerce and White House Administration on Monday (Feb. 19) announced an award of $1.5 billion in direct funding to GlobalFoundries, the world’s third-largest contract chipmaker headquartered in Malta, New York.

“Semiconductors are the brain of modern technology. While they are no larger than a fingernail and no thicker than a piece of paper, they are essential to every electronic device that we currently use — from computers and televisions to cars and washing machines,” said Vice President Kamala Harris in a statement.

The federal funding comes from the $50 billion CHIPS and Science Act, which is meant to strengthen U.S. domestic supply chain resilience, bolster U.S. competitiveness in current-generation and mature-node semiconductor production and support domestic economic and national security capabilities. It is the third announcement the Department of Commerce has made under the Act.

GlobalFoundries is one of the largest semiconductor foundries in the world, and the only company of its size and scale to be headquartered in the U.S.

Other chipmakers that operate at a scale similar to GlobalFoundries include South Korea’s Samsung, China’s Semiconductor Manufacturing International Corporation (SMIC), and Taiwan’s United Microelectronics and Taiwan Semiconductor Manufacturing Company (TSMC).

“With new onshore capacity and technology on the horizon, as an industry we now need to turn our attention to increasing the demand for U.S.-made chips, and to growing our talented U.S. semiconductor workforce,” Thomas Caulfield, GlobalFoundries CEO, said in a press release.

Read more: Chiplet Technology May Be Poised to Transform Payment Systems

Chips are Fundamental to Everyday Applications

As developing industries like artificial intelligence (AI), electric vehicles (EVs), and others create a powerful demand for chips, current global capacity has been strained.

And because most chipmakers and semiconductor companies are headquartered outside of the U.S., domestic companies building transformative products that rely on those chips have found themselves, and their business models and pricing decisions, subject to ongoing supply chain disruptions.

The situation is such that OpenAI CEO Sam Altman has reportedly been discussing raising up to $7 trillion in funds for an initiative to increase the planet’s chip-building capabilities.

“It was the shortages of semiconductors during the COVID-19 pandemic that raised prices for consumers and led to the shutdown of automobile manufacturing sites across the country,” said Secretary of Commerce Gina Raimondo in a statement announcing the Department’s grant to GlobalFoundries.

“We’re working to onshore these critical technologies in order to bolster the supply of domestic chips that are essential to manufacturing cars, electronics, and national defense systems,” Raimondo added.

The $1.5 billion in proposed funding, as well as an additional $1.6 billion loan facility, that GlobalFoundries is receiving from the federal government is slated to be divvied up across three projects, two of which will take place in Malta, New York, where the company is headquartered, and the third in Vermont.

Ensuring a Stable Supply Chain for Critical Technologies

The CHIPS funding will allow GlobalFoundries to fund the construction of a new, large-scale 300 mm fabrication facility in Malta, New York, to produce “high value technologies not currently available in the U.S.” the company said.

In addition to the new large-scale facility, the federal funding will also go toward an expansion of GlobalFoundries’ existing fabrication facility in Malta, and includes a strategic agreement with General Motors (GM), whose EV output and driver assistance systems have been barraged over the past few years by supply chain woes and chip shortages that have led to idled plants as a result of limited supply.

The Malta expansion and new 300 mm fabrication facility are together expected to triple the existing capacity of GlobalFoundries’ Malta campus over the next decade years, allowing GlobalFoundries to produce 1 million wafers annually once all phases are complete.

In Burlington, Vermont, GlobalFoundries is planning to use the federal grant to modernize its existing manufacturing hub.

The Vermont investment will create the first U.S. facility capable of mass-producing a new type of chip used in electric vehicles, power grids, data centers, 5G and 6G smartphones, and other critical technologies.