U.S. Government Allocates $1.5 Billion to GlobalFoundries for Semiconductor Expansion

In a significant move aimed at bolstering domestic supply chains, the U.S. government has announced a $1.5 billion award to GlobalFoundries (GFS.O) to facilitate the expansion of semiconductor production. The Biden administration disclosed this development on Monday, highlighting its strategic imperative to fortify the nation’s semiconductor capabilities.

Under the terms of a preliminary agreement with the Commerce Department, GlobalFoundries, the world’s third-largest contract chipmaker, is slated to construct a new semiconductor production facility in Malta, New York, while also expanding its existing operations in Malta and Burlington, Vermont. Complementing the grant will be $1.6 billion in accessible loans, with the combined funding projected to catalyze an estimated $12.5 billion in overall potential investment across the two states.

Biden administration officials underscored the transformative economic impact of these projects, anticipating the creation of more than 10,000 jobs over a decade. Emphasizing the administration’s commitment to fostering equitable economic growth, officials assured that the positions would offer competitive wages and comprehensive benefits, including childcare support.

Commerce Secretary Gina Raimondo emphasized the critical role of the semiconductor chips produced by GlobalFoundries in bolstering national security. Highlighting their indispensable utility in a myriad of applications ranging from satellite communications to automotive safety features, Raimondo stressed the significance of securing a robust domestic semiconductor supply chain.

Thomas Caulfield, President, and CEO of GlobalFoundries echoed Raimondo’s sentiments, stressing the imperative for concerted efforts to stimulate demand for U.S.-manufactured chips and to cultivate a skilled semiconductor workforce.

The announcement marks the latest in a series of initiatives under the CHIPS and Science Act, with Raimondo affirming the government’s intention to unveil several funding awards in the coming weeks and months as part of the $39 billion program aimed at enhancing semiconductor manufacturing capabilities.

Addressing the strategic significance of the Malta facility expansion, Raimondo emphasized its pivotal role in safeguarding a steady supply of chips for critical industries, including automotive manufacturing. This sentiment was echoed following a recent long-term agreement between GlobalFoundries and General Motors (GM), aimed at mitigating chip shortages that have plagued the automotive sector during the COVID-19 pandemic.

Raimondo further highlighted the groundbreaking advancements anticipated through the expansion, noting that the Malta facility would produce high-value chips currently unavailable within the United States. Moreover, the revitalized facility in Burlington is poised to become the nation’s first high-volume manufacturing hub for next-generation gallium nitride on silicon semiconductors, integral to applications spanning electric vehicles, the power grid, and smartphones.