For the semiconductor manufacturing sector, the second half of 2024 ended chaotically as multiple fab delays emerged, and the chaos continues into 2025 with even more fab delays and closures.
These unexpected fab closures come as the global semiconductor industry is facing numerous challenges and significant disruptions across the board, due to new tariffs or raw materials export restrictions as well as oversupply issues.
The fab closures include GlobalFoundries' and STMicroelectronics’ joint planned fab in Crolles, France, and Sumitomo Electric’s silicon carbide (SiC) fab project.
Late in 2024, Intel Corp. delayed its Magdeburg, Germany, fab due to market needs and framework conditions. The country and the vendor are said to continue to be interested in building the fab but need to re-evaluate the feasibility of the project. Also in late 2024, Wolfspeed and ZF suspended a SiC fab project in western Germany.
GF, ST fab suspension
According to a report from Bloomberg, a joint project between GlobalFoundries and STMicroelectronics in France has stalled. Originally finalized in June of 2023, the fab has been slow to progress and now construction has been suspended.
The overall project is slated to cost about $8 billion for capital expenditure, maintenance and ancillary costs. The facility will get significant financial support from the French government under its “France 2030” plan as well as aid from the European Chips Act, which is designed to accelerate chip making in the region with an investment of $47 billion.
It is unclear if this project will continue after the suspension.
Sumitomo
Sumitomo canceled its wafer fab project due to weak demand in the electric vehicle (EV) market and uncertainty regarding recovery timelines, according to reports.
Sumitomo planned to start production in 2027, targeting about 180,000 SiC wafers. Now that plan has been scrapped and the company may instead focus on other sectors such as automotive wiring harnesses, power cables for environmental energy and optical components for data centers.
STAR Act
The good news in the U.S. is that the U.S. House of Representatives introduced the bipartisan Semiconductor Technology Advancement and Research (STAR) Act.
This extends the Advanced Manufacturing Investment Credit (AMIC), which is a 25% tax credit for chip production. It also expands the eligibility of the credit to include investments in chip design. This will likely help to continue semiconductor development and R&D in the country.
“U.S. leadership in semiconductor research, design and manufacturing is critical to America’s economy, technology leadership and national security,” said Jon Neuffer, president and CEO of the Semiconductor Industry Association (SIA). “The CHIPS Act’s investment tax credit has been hugely successful in strengthening America’s semiconductor ecosystem, spurring substantial private investment and helping to put the U.S. on track to more than triple domestic chip manufacturing capacity by 2032, the largest percentage increase in the world.”
Neuffer added that the STAR Act would build on the momentum of the CHIPS Act by promoting growth in chip manufacturing in the U.S.
