GlobalFoundries has been selected to receive the first major grant in the Biden administration’s CHIPS and Science Act program to reinvigorate U.S. chip production. The $1.5 billion in grants will be used to construct and expand facilities in Vermont and New York. Additionally, the administration plans to make available $1.6 billion in federal loans. The grants are estimated to triple GlobalFoundries’ New York state production capacity within the next 10 years. Chipmakers including Intel, Micron Technology, Samsung Electronics and TSMC have submitted grant applications for government assistance in building new or updating existing facilities.

The Commerce Department is expected to award additional CHIPS grants to add or expand semiconductor manufacturing production in Arizona, Ohio and Texas in the coming weeks. Congress passed the CHIPS and Science Act in July 2022 to strengthen American semiconductor manufacturing and supply chains as a matter of national security.

GlobalFoundries says it will use the funds to “expand and create new manufacturing capacity and capabilities to securely produce more essential chips for automotive, IoT, aerospace, defense, and other vital markets,” according to a press release that describes the 15-year-old company as “the only U.S.-based pure play foundry with a global manufacturing footprint including facilities in the U.S., Europe, and Singapore.”

The CHIPS financial package will help GlobalFoundries make the changes necessary “to fulfill a contract with General Motors to ensure dedicated chip production for its cars,” reports The New York Times, adding that “it will also help GlobalFoundries build a new facility to manufacture critical chips that are not currently being made in the United States.” This includes a new class of semiconductors for use in satellites.

The funds will also go toward updating GlobalFoundries operations in Vermont, where the company plans to create the first U.S. facility that can produce chips for use in 5G and 6G smartphones, electric vehicles and the power grid. “If not for the investment, administration officials said the facility in Vermont would have faced closure,” NYT reports.

The Wall Street Journal says the GlobalFoundries award “is contingent on a round of due diligence before a final agreement is reached” and that “the money will be released in stages as the projects reach construction and production milestones.”

The $53 billion CHIPS Act was passed by bipartisan lawmakers for “new taxpayer-funded investments in chip research and production after the U.S.’s share of global chip manufacturing dwindled to around 12 percent in 2020, from 37 percent in 1990,” WSJ writes, noting that “the legislation set aside $39 billion specifically for manufacturing subsidies.”

Related:
Nvidia’s Staying Power Is the $2 Trillion Question, The Wall Street Journal, 2/19/24
Plans to Expand U.S. Chip Manufacturing Are Running into Obstacles, The New York Times, 2/19/24
Intel in Talks for More Than $10 Billion in Chips Act Incentives, Bloomberg, 2/16/24
Softbank Founder Reportedly Aims to Raise $100 Billion to Build AI Chip Company That Would Rival Nvidia, Tom’s Hardware, 2/17/24