GlobalFoundries weighing US production capacity increases

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GlobalFoundries weighing US production capacity increase options.
Image: GlobalFoundries

GlobalFoundries CEO, Dr. Tom Caulfield, is considering two possibilities regarding the expansion of his firm’s U.S. production capacity, reports Reuters. The executive noted his company could increase the output of its Malta, New York factory, or build another local plant.

Caulfield also said his decision would be based on customer demand and the passage of a newly proposed American semiconductor industry stimulus bill.

Expand Existing Chipmaking Facilities

In a recent interview, GlobalFoundries’ chief executive detailed the challenges facing his firm’s U.S. expansion plans.

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Although the Abu Dhabi government-owned brand wants to ramp up its American production capacity, it does not want to become financially overextended doing so. Unfortunately, the coronavirus pandemic’s devastating impact on the world has made revenue forecasting very difficult.

Currently, the manufacturer maintains two facilities in the United States; one in Burlington, Vermont, and the other in Malta, New York. The Empire State plant’s floor is 30 to 40 percent unoccupied, which allows the company to pack it with more equipment. As such, Caulfield estimates GlobalFoundries could install some additional machinery and increase the factory’s output in 12 to 14 months.

Or Build a New Foundry

On the other hand, the world’s third-largest chip fabricator could build a second plant in Malta. The company locked down a purchase option on a 43,500 square foot plot of land next to its New York facility. However, the firm’s proposed new site would not produce components until 2024 and would potentially require a double-digit billion-dollar investment.

That said, Caufield believes GlobalFoundries could get the new production center online in two years with Washington’s financial assistance. The Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act would provide $22.8 billion in semiconductor sector funding. Notably, the bill includes $10 billion in federal subsidies for chipmakers that construct factories in-country.

If GlobalFoundries could secure some of that government money, it could justify building a chip-making facility in the medium term. Given its bipartisan and White House support, the CHIPS Act will likely receive speedy approval. However, as TSMC has announced plans to build its own subsidized U.S. factory, Washington’s stimulus cash could be hard to come by.

As such, GlobalFoundries might want to consider India and Taiwan’s recently unveiled and quite robust foundry-building incentive programs.

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