US awards US$1.5 billion to GlobalFoundries for domestic semiconductor production

The US government is awarding US$1.5 billion to GlobalFoundries to expand semiconductor production, the Biden administration said on Monday, in a bid to strengthen domestic supply chains after the Covid-19 pandemic exposed weaknesses.

GlobalFoundries, the world’s third-largest contract chip maker, will build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont, according to a preliminary agreement with the Commerce Department.

The US$1.5 billion grant will be accompanied by US$1.6 billion in available loans, with the funding expected to generate US$12.5 billion in overall potential investment across the two states, the department said.

The projects, funded under the Chips and Science Act, are expected to create 1,500 manufacturing jobs and 9,000 construction jobs over a decade, said Biden administration officials, adding that the positions will pay fair wages and offer benefits like childcare.

As part of the terms of the deal, US$10 million would be dedicated to training workers and GlobalFoundries will extend its existing US$1,000 annual subsidy for child care and child care support services to construction workers.

“The chips that GlobalFoundries will make in these new facilities are essential chips to our national security,” Commerce Secretary Gina Raimondo told reporters at a briefing.

Senate Majority Leader Chuck Schumer was an architect of the law that enables the funding of chips factories, a technology that he said was as essential to the US economy and national security as food.

Schumer said in an interview with Associated Press that the US could be vulnerable to disruptions as it was during the coronavirus pandemic when auto plants lacked enough chips to keep making vehicles.