Power Semiconductors

GlobalFoundries receives $1.5 billion in CHIPS Act funding

21 February 2024
Engineers in GlobalFoundries’ Malta fab work in a cleanroom. The company is the first pure-play foundry to receive CHIPS and Science Act funding that will support the expansion of capacity at two locations in the U.S. Source: GlobalFoundries

GlobalFoundries (GF) is the first semiconductor foundry to receive CHIPs and Science Act incentives with $1.5 billion of planned direct funding to expand and create manufacturing capacity and capabilities at its Malta, New York, and Essex Junction, Vermont, fabs.

The expansion will allow GF to securely produce more chips for the automotive, internet of things, aerospace and defense sectors, the company said.

3 projects

Specifically, the funding will support three GF projects.

First, the expansion of its Malta Fab will add new technologies for the U.S. automotive industry as it continues to transition from combustion engine vehicles to partial- and all-electric vehicles (EVs). GF said this expansion will be critical to ensure the automotive industry has resilience in the semiconductor supply chain. GF currently has agreements with Ford Motor Company, BMW and General Motors to build chips for their vehicles.

Second, the funding will support the construction of a new start-of-the-art fab at the Malta campus for automotive, aerospace, defense and artificial intelligence semiconductors. Construction of the new fab and the expansion of the existing GF fab is expected to triple the existing capacity at Malta over the next 10 years. It will also increase wafer production to 1 million per year once all phases are complete, GF said.

Lastly, the CHIPS Act funding will be used to upgrade GF’s existing Essex Junction, Vermont, facility to expand capacity and create what it claims is the first U.S. facility capable of next-generation, high-volume gallium nitride (GaN) semiconductors. These chips are used in EVs, power grids, data centers, 5G and 6G smartphones and many other devices.

In total, the projects are expected to create over 1,500 manufacturing jobs and about 9,000 construction jobs. GF said it will invest more than $12 billion at these two U.S. sites through public-private partnerships over the next 10 years.

Chip advancement

“The significant semiconductor manufacturing incentives announced today will help advance U.S. chip production and reinforce America’s economic and national security,” said John Neuffer, president and CEO of the Semiconductor Industry Association (SIA), a trade organization the represents more than 90% of chip companies in the U.S.

Neuffer said the CHIPS Act is working and the SIA is working with the government to ensure the “manufacturing and research provisions deliver maximum benefits to U.S. chip production, innovation and supply chain resilience” for the foreseeable future.

Previously, the Biden-Harris Administration awarded $162 million CHIPS Act funding to Microchip Technology to increase its manufacturing of microcontrollers and specialty chips for automotive, commercial, industrial, defense and aerospace. It also handed out $35 million to BAE Systems to modernize its Nashua, New Hampshire, facility used to produce chips for the defense department.

Is Intel next?

According to a report from Bloomberg, the Biden Administration is currently in talks with Intel Corp., which is attempting to become the second largest foundry globally, to dole out some $10 billion in CHIPS Act funding. This would be the largest award yet under the program to bring semiconductor manufacturing back to the U.S.

The package to Intel is said to include both loans and grants.

Intel is currently building four fabs in the U.S., presumably with the intention of receiving grants from the CHIPS Act once it was announced. Intel is building two fabs at its Ocotillo campus in Chandler, Arizona, and another two fabs in Licking County, Ohio. It is presumed this will be where the CHIPS Act funding will be used.

Why it matters

The CHIPS Act is promoted as a step toward bringing semiconductor manufacturing back to the U.S. However, to do this means building more chip fabs domestically. This is an incredibly expensive endeavor.

Government subsidies have always been a way to get foreign and domestic companies to invest in their home country and with multi-billion-dollar projects like semiconductor fabs this is vital. Continued subsidies and incentives in Taiwan, Korea and China while other countries cut funding for chip manufacturing allowed a power shift and aggregation of chipmaking in Asia.

Now, many countries are looking to expand the semiconductor industry to a more regionally diverse supply chain. This is not just due to an economic reason but a national security one as well. If another pandemic like COVID-19 forces lockdowns or production issues or geopolitical events impact chip production, a more diverse supply chain may be able to handle these events resiliently. At least in theory.

The CHIPS and Science Act is considered one of the first steps toward moving to a sturdy regional supply chain in the U.S. with more than $50 billion allotted to semiconductor manufacturing alone and another $200 billion for R&D, other manufacturing services, packaging and testing.

Earlier this month, the Biden Administration unveiled the National Semiconductor Technology Center (NSTC), the centerpiece of its $11 billion R&D program for the U.S. Another $240 million was allotted to create eight microelectronics commons regional innovation hubs in the U.S. In all, more than 30 states and 360 organizations will receive funding for the hubs, according to the U.S. Department of Defense.

Already building

Even before CHIPS Act funding was being received, companies already started plans to build new fabs and facilities in the U.S. Intel announced its four fabs, but other projects include:

  • Texas Instruments’ five 300 mm fabs.
  • TSMC building two fabs in Arizona.
  • Samsung building a fab in Tyler, Texas.
  • Micron building a new memory fab in Idaho.
  • XFab’s $200 million SiC factory in Texas.
  • Wolfspeed’s $5 billion on a silicon carbide (SiC) fab in North Carolina.
  • NHanced Semiconductors’ $236 million advanced packaging investment.
  • Everspin Technologies’ planned 10,000 sq ft discrete and embedded MRAM factory in Indiana.
  • Trusted Semiconductors’ $34 million planned rad-hard IC expansion.
  • Reliable Microsystems $7.4 million Indiana expansion.
  • Integra Technologies’ $1.8 billion expansion project in Wichita, Kansas.
  • A $1.9 billion microchip plant from EMP Shield in Burlington, Kansas.
  • Applied Materials' $4 billion R&D platform in Silicon Valley.

In total, more than $220 billion in investments have already been announced pending CHIPS Act funding, according to the SIA.

To contact the author of this article, email PBrown@globalspec.com

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