GlobalFoundries Nets $1.5B From CHIPS Act Despite Sanctions Violation Fine

Semiconductor maker GlobalFoundries, recently fined $500,000 for sanctions violations involving China, has been awarded up to $1.5 billion in funding under the US government's CHIPS and Science Act.

The multinational semiconductor contract manufacturer said the money would go towards expanding its chipmaking capacity and technology development in the US to help support customers across a range of markets such as automotive, mobile devices, IoT, datacenters, and aerospace and defense. 

"GF's essential chips are at the core of US economic, supply chain and national security," claimed GlobalFoundries president and CEO Thomas Caulfield. "We greatly appreciate the support and funding from both the US Government and the states of New York and Vermont, which we will use to ensure our customers have the American-made chips they need to succeed and win."

The Department of Commerce said it will disburse the funds based on GlobalFoundries' completion of certain project milestones. These include construction, production, and commercial targets, which will be monitored through financial reports and other metrics.

Justifying the subsidy payout, the DoC claims there are only four companies outside of China that can provide foundry capabilities for current and mature process nodes on the scale of GlobalFoundries, and the biz is the only one headquartered in the United States.

Shortages of semiconductors caused major disruptions during the COVID-19 pandemic, resulting in an impact on the availability and price of a broad range of goods for Americans, as well as the shutdown of automobile manufacturing sites.

"By investing in GF's domestic manufacturing capabilities, we are helping to secure a stable domestic supply of chips that are found in everything from home electronics to advanced weapons systems," Secretary of Commerce Gina Raimondo commented.

In more detail, GlobalFoundries said it will use the funding to support three projects. The first will be an expansion of its Malta, New York fabrication plant with technology already in use at its Singapore and German facilities to produce domestically manufactured chips for the auto industry.

Second will be the modernization of another fab at Essex Junction, Vermont, to boost the production capacity of gallium nitride (GaN) semiconductors for use in electric vehicles, datacenters, smartphones, and other critical applications. 

The third is the construction of a new cutting-edge fab at the Malta campus to meet anticipated silicon requirements across a broad range of markets and applications including automotive, AI in the datacenter, as well as aerospace and defense. This will be "in alignment with market conditions and customer demand," said GlobalFoundries.

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GlobalFoundries has won this payout despite being slapped with a half-a-million dollar penalty earlier this month for violating sanctions by sending shipments to an affiliate of blocklisted Chinese biz Semiconductor Manufacturing International Corporation (SMIC).

The semiconductor maker coughed up to 74 unauthorized shipments without a required license between February 2021 and October 2022. GlobalFoundries cited this as a misstep as a consequence of a data entry error that led to the China-based SJ Semiconductor (SJS) not being properly vetted by its transaction screening system. ®

PS: There have been some headlines lately about US President Joe Biden "Trump-proofing" the CHIPS Act so that the incoming commander-in-chief, who has poured scorn on the subsides, can't block or meddle with them. Yet as far as we can tell, there's little stopping the next President and his Republican Congress from throwing roadblocks in the way of payments to chip makers or revising and neutering the act, if they so choose.