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By: Don Driggers
The Biden administration has allocated a significant sum of $1.5 billion to GlobalFoundries, the largest domestic semiconductor manufacturer in the United States. This substantial grant marks the first major disbursement from the $52 billion Chips Act, a bipartisan initiative passed nearly two years ago with the aim of bolstering domestic semiconductor production, NY Post reported.
Under a preliminary agreement with the Commerce Department, GlobalFoundries, the world’s third-largest contract chip maker, is slated to construct a new semiconductor production facility in Malta, New York. Additionally, the grant will facilitate the expansion of existing operations at the Malta plant and another facility in Burlington, Vermont. This infusion of funds is further complemented by $1.6 billion in available loans, with the overall investment across the two states expected to reach $12.5 billion.
Commerce Secretary Gina Raimondo emphasized the critical importance of the chips manufactured by GlobalFoundries, highlighting their role in national security endeavors. These semiconductor chips, minuscule in size but indispensable in functionality, find applications ranging from satellite and space communications to defense systems and everyday consumer electronics such as automobiles, WiFi networks, and cellular connections.
The planned projects are poised to generate substantial economic benefits, with projections indicating the creation of 1,500 manufacturing jobs and an additional 9,000 jobs in the construction sector over the next decade. As part of the agreement, a portion of the funding, amounting to $10 million, will be allocated towards workforce training initiatives. Moreover, GlobalFoundries has committed to extending its existing childcare subsidies to construction workers, reflecting a broader commitment to supporting its workforce.
The Chips Act, signed by President Biden in August 2022, represents a concerted effort to enhance domestic semiconductor production, thereby reducing dependence on foreign suppliers and mitigating national security risks. The legislation encompasses a comprehensive framework, including direct grants, research and development funding, as well as provisions for workforce training. Despite the ambitious goals outlined in the Chips Act, disbursements have been limited thus far, with only a $35 million grant awarded to BAE Systems for military aircraft chip production.
The semiconductor industry has faced challenges on multiple fronts, with delays in production announced by major players such as Samsung and Taiwan Semiconductor Manufacturing Co. (TSMC). These setbacks have been attributed to various factors, including difficulties in securing skilled labor and higher-than-anticipated expenses. TSMC, which had sought substantial funding under the Chips Act, expressed reservations about certain stipulations attached to the proposed funding, underscoring the complexities inherent in government-industry partnerships.
In summary, the allocation of $1.5 billion to GlobalFoundries represents a significant milestone in the implementation of the Chips Act and underscores the Biden administration’s commitment to strengthening domestic semiconductor manufacturing capabilities. As the semiconductor industry navigates a landscape fraught with challenges, collaboration between government and industry stakeholders will be crucial in realizing the objectives outlined in the Chips Act and ensuring the resilience and competitiveness of the U.S. semiconductor sector.
Semiconductors, essential components in electronic devices, enable the flow of electrical current with controlled precision. These tiny chips power everything from smartphones to satellites, facilitating communication, computation, and automation in modern technology. As the backbone of the digital age, semiconductors continue to drive innovation and shape our interconnected world.
