The Biden administration has announced a significant step towards revitalizing semiconductor manufacturing in the United States with a $1.5 billion grant awarded to New York-based chipmaker GlobalFoundries. This grant, among the largest awards to date from a $39 billion government funding pool, marks a pivotal moment in efforts to bolster domestic chip production.
In addition to the grant, the administration plans to offer $1.6 billion in federal loans to support GlobalFoundries’ expansion efforts. These funds aim to triple the company’s production capacity in New York state over the span of ten years.
The initiative underscores bipartisan efforts to reduce America’s reliance on foreign semiconductor sources. With just 12 percent of chips currently manufactured domestically, the majority being produced in Asia, the COVID-19 pandemic highlighted vulnerabilities in the global supply chain. Shortages of critical chips led to disruptions in various industries, including automotive manufacturing.
The grant to GlobalFoundries will facilitate the expansion of its existing facility in Malta, NY, ensuring dedicated chip production for General Motors vehicles as part of a contractual agreement. Furthermore, it will enable the establishment of a new facility for manufacturing crucial chips currently not produced in the U.S., such as those tailored for satellite use, capable of withstanding high levels of radiation.
Additionally, the funding will support upgrades to GlobalFoundries’ operations in Vermont, where the company will become the first U.S. facility capable of producing chips essential for electric vehicles, the power grid, and advanced smartphone technology (5G and 6G). This investment forestalls the closure of the Vermont facility, showcasing the tangible impact of government support in maintaining and enhancing domestic semiconductor capabilities.
The Biden administration aims to boost American semiconductor manufacturing, which has declined as factories moved to East Asia in recent years. The global chip shortage during the pandemic disrupted auto manufacturing, prompting Congress to allocate over $50 billion to the semiconductor industry, including $39 billion in grants and $11 billion for research and development.
Commerce Secretary Gina Raimondo stated that the $1.5 billion award to GlobalFoundries will ensure a stable chip supply for auto manufacturers and prevent future supply chain disruptions.
Majority Leader Senator Chuck Schumer highlighted that the investment will enable GlobalFoundries to invest over $12 billion in the U.S., creating 9,000 construction jobs and 1,500 permanent manufacturing jobs.
The government will provide $10 million for workforce development, partnering with GlobalFoundries to train workers for the semiconductor industry, addressing a common challenge in the sector.
The announcement is subject to due diligence, with funding tied to meeting construction and production milestones.
Amid reduced revenue due to decreased demand, GlobalFoundries hopes for government support to boost chip demand and encourage companies to shift production to U.S. factories.