GlobalFoundries Scores $1.5B In Uncle Sam's Semiconductor Subsidy Bonanza

GlobalFoundries is pocketing $1.5 billion in CHIPS and Science Act funding from the US government to ensure continued supply of the chips it makes for the automotive, communications, and defense industries.

The Department of Commerce said it has signed a non-binding preliminary memorandum of terms (PMT) with GlobalFoundries under which the chipmaker will get the subsidy cash. This will be used to support a new state-of-the-art manufacturing plant in New York, capacity expansion, and modernization of the company's existing sites in New York and Vermont.

This move follows the announcement of $162 million in funding to Arizona-based Microchip Technology in January, and $35 million to BAE Systems in December.

GlobalFoundries, a contract manufacturer formed from the spin-off of AMD's manufacturing biz in 2009, is one of only four companies outside of China that offer both cutting-edge and mature semiconductor foundry capabilities at scale, the Commerce Department said, and the only one headquartered in the US.

Investing in GlobalFoundries is seen by the US authorities as a way of combating the shortage of key semiconductors that was experienced during and after the pandemic, when factories around the world cut production. Some of the funding is expected to go to expanding a dedicated "capacity corridor" that GlobalFoundries agreed for General Motors.

In addition to this subsidy funding, the CHIPS Program Office may make about $1.6 billion in loans available to GlobalFoundries under the PMT. The total potential public and private investment for all the projects could come to as much as $12.5 billion.

However, the funding is not entirely set in stone yet. The Commerce Department said it will carry out comprehensive due diligence on all proposed projects and enter into final award documents if satisfied.

Commerce Secretary Gina Raimondo said in a statement that semiconductors are in everything from fridges to the most advanced weapons systems, and access to them carries important economic and security implications.

"We're working to onshore these critical technologies in order to bolster the supply of domestic chips that are essential to manufacturing cars, electronics, and national defense systems in New York, Vermont, and states across the country," she said.

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Raimondo also told the Reuters news agency that her department is in talks with other applicants, and expects to make several more announcements by the end of March. She named TSMC, Samsung, and Intel as companies planning new facilities of "a size, scale and complexity that's never been done before in this country."

Recent reports claim that Intel may be awarded upward of $10 billion in subsidies from the CHIPS and Science Act funding, which would make it likely to be the largest recipient of the $39 billion being allocated to boost manufacturing out of the total of $53 billion funding pot.

Reports last year put figures on the potential payouts to Intel, TSMC, and Samsung for their new US fabrication plants at up to $7.5 billion, $6 billion, and $2.55 billion respectively, although The Register noted that these could go higher, with Intel possibly getting as much as $17.5 billion in subsidies and loans.

Intel chief Pat Gelsinger last year argued that his company should benefit more from the government funding because it conducts research, development, and manufacturing in the US. ®