The U.S. Commerce Department signed a preliminary agreement with computer chipmaker GlobalFoundries to provide $1.5 billion in incentives for three manufacturing plants, officials announced on February 19. The company plans to build a plant and expand another in New York state and modernize it. a plant in Vermont.
The projects are expected to include about 9,000 construction jobs over 10 years. The work is subject to project labor agreements, as encouraged by officials when companies seek CHIPS Act funding. A PLA is already in place with GlobalFoundries for the work, Mark McManus, general president of the United Union of Plumbers and Pipefitters, said in a statement.
GlobalFoundries plans to triple the capacity of its manufacturing campus in Malta, New York, with an expansion of its 1.2 million-square-foot manufacturing plant, or “fab.” The construction of a second factory is also planned. It would produce 300mm chips, which are not currently manufactured domestically but are needed for cutting-edge technologies. The company also plans to upgrade its factory in Burlington, Vt., to make it capable of making large volumes of chips used in electric vehicles, power grid equipment and smartphones.
Records show GlobalFoundries hired JE Dunn Construction Co. for the new factory of 633,000 square meters. The contractor deferred comment to the owner, who did not immediately respond to inquiries.
GlobalFoundries said it plans to spend more than $12 billion on the projects over 10 years. On the same day as the Commerce Department’s announcement, New York Governor Kathy Hochul said the state would provide GlobalFoundries with $575 million in performance-based tax credits. In addition, the New York State Energy Authority plans to contribute $30 million for infrastructure improvements associated with the project.
The Commerce Department money comes from $52 billion included in the Science and Chips Act of 2022 aimed at boosting U.S. semiconductor chip manufacturing. Officials will then work through a due diligence process with GlobalFoundries before finalizing the $1.5 billion award.
The preliminary agreement with GlobalFoundries is the third announced by Commerce Department officials to date and is the largest amount of funding to date under the program. In December, officials said they planned to offer $35 million in incentives to BAE Systems Inc. for the modernization of a New Hampshire plant that produces chips used in F-35 fighter jets, and last month announced $162 million for Microchip Technology Inc. expand two chip manufacturing plants, one in Colorado and the other in Oregon.
The United States once accounted for 37 percent of global semiconductor manufacturing, but that has dropped to 12 percent as of 2021, according to the Semiconductor Industry Association. Biden administration officials have highlighted the effort to grow domestic chipmaking as crucial not only to the economy in light of the supply chain shortages that followed the outbreak of the COVID-19 pandemic, but also for national security, as widespread uses of chips range from telecommunications to military equipment.
“We are working to incorporate these critical technologies in order to strengthen the domestic supply of chips that are essential to the manufacturing of automobiles, electronics and national defense systems in New York, Vermont and states across the country,” said Gina Raimondo, Secretary of Commerce. in a statement.
GlobalFoundries is one of four companies outside of China that can provide chip foundry services on this scale, and the only one based in the US, according to Commerce Department officials. The company supplies manufacturers such as technology company AMD, aerospace company Lockheed Martin and communications technology maker Qualcomm Technologies Inc. The expansion of its existing plant in Malta is planned as part of a deal to supply General Motors.
The Commerce Department has received more than 160 applications for the first round of CHIPS Act funding and another 160 for a second round aimed at smaller projects. Officials say they expect to announce more preliminary deals with chipmakers this year.
