U.S. Government Awards $1.5 Billion to GlobalFoundries; Here’s the Reason

The Biden administration announced on Monday a $1.5 billion grant awarded to GlobalFoundries, the world’s third-largest contract chipmaker, aimed at bolstering domestic semiconductor production and strengthening supply chains.

Under a preliminary agreement with the Commerce Department, GlobalFoundries intends to construct a new semiconductor production facility in Malta, New York, while also expanding existing operations in Malta and Burlington, Vermont.

Government Assistance for GlobalFoundries:

In addition to the $1.5 billion grant, GlobalFoundries will have access to $1.6 billion in loans, with the combined funding expected to catalyze approximately $12.5 billion in overall investment across New York and Vermont.

The projects, supported by the CHIPS and Science Act, are projected to create over 10,000 jobs over the next decade, with a focus on offering fair wages and benefits like childcare, according to Biden administration officials.

National Security Implications:

Commerce Secretary Gina Raimondo emphasized the critical role of the chips manufactured by GlobalFoundries in national security, highlighting their use in satellite communications, defense systems, automotive safety features, and various everyday applications.

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Future Plans and Semiconductor Demand:

GlobalFoundries CEO Thomas Caulfield emphasized the need to stimulate demand for U.S.-made chips and expand the domestic semiconductor workforce, signaling the industry’s commitment to future growth and innovation.

Raimondo indicated that this grant marks the government’s third announcement under the CHIPS initiative, with plans to distribute additional funding awards in the coming weeks and months as part of the $39 billion program to bolster semiconductor production.

Addressing Automotive Chip Shortages:

The expansion of GlobalFoundries’ Malta facility aims to address chip shortages in the automotive industry, securing a stable supply chain for automakers like General Motors (GM) and preventing production disruptions experienced during the COVID-19 pandemic.

The revamped Burlington facility will pioneer high-volume manufacturing of gallium nitride on silicon semiconductors, catering to the growing demand for electric vehicles, power grid technology, and smartphone components.