GlobalFoundries Invests $ 1.4 Billion in Plant Growth Amid Increasing Demand for Chips

WASHINGTON, March 3 (Reuters) – GlobalFoundries will make investments $ 1.4 billion this yr to spice up output at three factories in america, Singapore and Germany as a world semiconductor scarcity has boosted demand for chips , mentioned its managing director.

The US-based firm, a unit of Abu Dhabi’s public fund Mubadala, might additionally postpone its preliminary public providing till the tip of 2021 or the primary half of subsequent yr, in comparison with a earlier goal of ending. 2022 or early 2023.

It’s focusing on income development of 9% to 10% from simply over $ 5.7 billion final yr.

Automakers and electronics producers are going through a world chip scarcity, which has resulted in manufacturing delays.

“The adoption of a know-how that may usually have taken a decade occurred in a yr in 2020 due to COVID-19,” GlobalFoundries CEO Thomas Caulfield informed Reuters.

Earlier than the pandemic, the chip business was anticipated to develop 5% over a five-year horizon and now it has accelerated to develop at twice that fee, he mentioned.

Whereas the tight provide has led automakers similar to Volkswagen, Ford and Normal Motors to chop manufacturing, a rise in provide would create further demand.

GlobalFoundries mentioned the $ 1.4 billion, which will likely be break up evenly amongst its factories in Dresden, Germany, Malta, New York and Singapore, will begin ramping up manufacturing by 2022 to provide 12 chips. at 90 nanometers.

A couple of third of the funding will come from clients seeking to lock in provide over a number of years, Caulfield mentioned, forecasting a 20% improve in manufacturing subsequent yr after an anticipated 13% improve in 2021.

If demand continues to rise, GlobalFoundries might construct a brand new plant adjoining to its Malta, New York plant after securing a purchase order possibility settlement for round 66 acres of undeveloped land final yr.

However a call to interrupt by there would hinge on US Congress funding a bundle of measures to encourage chipmaking in america, generally known as the Chips Act, which was accredited final yr.

“It isn’t a matter of ‘if’, it is only a matter of ‘when’ … and a key a part of transferring ahead would be the funding of the Chips Act,” mentioned Caulfield.

U.S. President Joe Biden, who took workplace in January, has pledged to help the trouble, and senators plan to supply emergency funding for the regulation as half of a bigger program to counter the China’s rise to prominence, as chip manufacturing shifted to Asia.

GlobalFoundries is the third largest foundry on the planet by income behind Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics Co Ltd, however ranks second when accounting for the foundry portion of the enterprise of Samsung, which manufactures chips for different components of South Korean society.

(Republished by Alexandra Alper in Washington and Supantha Mukherjee in Stockholm; further reporting by Stephen Nellis in San Francisco; enhancing by Jason Neely)

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