Work to begin on GlobalFoundries chip plant

PHOTOGRAPHER: Stephen Williams

Site preparation work will start Monday on GlobalFoundries’ $4.2 billion computer chip plant after the company on Tuesday made the formal commitment to go forward.

The commitment letter delivered to state economic development officials Tuesday will entitle GlobalFoundries to receive a $650 million economic incentive payment from the state.

It is the company’s final commitment to build the 1.3 million-square-foot factory it is calling Fab 2, plans that were first announced in 2006.

“We’re basically starting down the path of spending the money and building the building,” GlobalFoundries CEO Douglas Grose said in an interview.

A real estate closing on the 223 acres GlobalFoundries is purchasing from the Luther Forest Technology Campus Economic Development Corp. is scheduled for this afternoon in Saratoga Springs and initial site preparation work will start Monday.

An official groundbreaking at the construction site in Malta is expected in July, company officials said.

“It was three years ago this month that we announced plans to build and operate the most advanced semiconductor manufacturing facility in the world in upstate New York,” GlobalFoundries Chairman Hector Ruiz said in a statement.

GlobalFoundries is the company created in March by Advanced Micro Devices and an Abu Dhabi investment fund to take over AMD’s manufacturing operations, including its plans for Luther Forest. As an independent “foundry,” the new company will sell computer chips to AMD but also to other customers.

“We’re talking to a lot of customers, all prospective,” Grose said.

GlobalFoundries also announced:

* It authorized high-tech contracting specialist M+W Zander, which will build the plant, to award the site development contract. The site clearing work will begin on Monday and will prepare the land for full-scale construction.

* It completed the development agreement with the towns of Malta and Stillwater. GlobalFoundries will be putting up $5 million, with $1 million for a 32-acre public recreation field complex in the Malta part of the technology campus, $3 million going to an independent community benefit foundation for Malta and $1 million for a community benefit foundation for Stillwater.

The nearly $7.8 million land purchase will be closed at 2 p.m. today at Saratoga National Bank.

Mike Relyea, president of the Luther Forest Technology Campus, said the land purchase and commitment announcement should put an end to speculation heard often since 2006 that AMD’s financial troubles would derail the chip plant.

“We’re very excited about it. The day-to-day folks have kept the faith,” Relyea said.

Tuesday’s developments follow the approval last week of a labor agreement with construction trade unions, a negotiation that delayed the start of work by about two months.

In addition to the $650 million incentive payment, GlobalFoundries will receive about $550 million more in Empire Zone tax breaks and infrastructure assistance, for a total of $1.2 billion in state incentives over the next 10 years.

Grose, who was in Albany Tuesday for an economic roundtable with Gov. David Paterson, said the state incentives were essential to bringing the plant to New York.

“To be very honest, this levels the playing field in terms of where we locate the plant,” Grose said. “Most foundry plants are in Asia.”

By being located in the Capital Region, the new plant will be able to take advantage of research, training programs and talent at local universities, Grose said.

Paterson welcomed the final commitment.

“As we work to recover from the worst economic downturn since the Great Depression, the thousands of new jobs and billions of dollars in capital expenditures this project brings will have an incredible impact on our reinvestment and recovery strategy in New York,” Paterson said in a statement.

Construction will take approximately two years and it will take an additional 12 to 18 months to ramp up to full production operations, with full-scale chip production starting in about 2012.

GlobalFoundries said the Fab 2 project is expected to create approximately 1,400 new semiconductor manufacturing jobs with an estimated annual payroll of more than $88 million. In addition, the project is expected to create approximately 5,000 new indirect jobs with an estimated total annual payroll of $290 million per year for all jobs.

Most of the $4.2 billion investment will be in the complex chip-making tools but building construction will be worth about $800 million, company officials said. Construction is expected to create about 1,600 new construction jobs plus an additional 2,700 local construction-related jobs.