MALTA — GlobalFoundries on Monday announced plans to build a second computer chip factory in Saratoga County and spend $1 billion to expand production at its existing plant there.
The buildout of existing space of Fab 8, as the 10-year-old plant is called, will happen in the near term as a response to unprecedented demand for computer chips.
The planning process is now underway for what would be named Fab 8.2, to be built nearby on the same campus and employ 1,000 people. How long that process takes is undetermined, and whether it is actually constructed would depend on the infusion of tax dollars via a public-private model that needs to be agreed on and would entail investments from customers and state and federal governments.
The time is ripe for such a partnership, as the COVID-19 pandemic has highlighted how tenuous the supply chain is for certain critical components of the American economy, and how reliant on foreign production.
A quarter-trillion dollar spending package to boost the U.S. semiconductor industry — including billions in direct subsidies for expansion by companies such as GlobalFoundries — was passed by the U.S. Senate last month but has not yet gained House approval.
Addressing an excited audience Monday, GlobalFoundries CEO Tom Caulfield noted that U.S.-based companies use 48% of the computer chips produced worldwide but only 12% of all chips are made in America.
GlobalFoundries is ready to narrow the gap. The installation of production equipment in now-unused floor space at Fab 8 and the construction of Fab 8.2 would double the output of GlobalFoundries’ current operations in Luther Forest, Caulfield said.
“This new fab will require investments in the billions and will not just support this manufacturing but also add about a thousand new jobs directly by GF and thousands of jobs indirectly, including construction and infrastructure jobs,” he said.”
U.S. Senate Majority Leader Charles Schumer, D-N.Y., and U.S. Secretary of Commerce Gina Raimondo attended Monday’s announcement.
Schumer has been a relentless supporter of federal assistance for computer chip makers and Raimondo made her support clear as well, saying that the entire ecosystem needs to be developed — not just chip fabs but research and development of chips and training and education of employees.
“Your industry underpins everything else in the economy,” she added. “This isn’t giving away money to big companies. This is making a historic, once-in-a-generation investment in our economic security and our national security.”
Answering reporters’ questions, Caulfield addressed a Wall Street Journal report last week that Intel is in discussions to buy GlobalFoundries: “There’s nothing to that story,” he said.
He also discussed human infrastructure in a tight labor market that’s still recovering from the pandemic.
GlobalFoundries currently has about 100 vacancies at Fab 8, will need an as-yet undetermined number of additional workers after the $1 billion buildout of Fab 8 is complete, and would need about 1,000 more workers when Fab 8.2 is complete.
Caulfield said the company devotes about 5% of all hours worked by employees to training, and considers the educational infrastructure in the Capital Region sufficient for GlobalFoundries’ needs at this time.
Monday’s announcement comes against the backdrop of a widespread shortage of computer chips serious enough to crimp manufacturing, including the well-publicized slowdown of auto production.
A drive to increase manufacture of semiconductors in the United States began in earnest in 2020, when a surge in remote working due to COVID resulted in high demand for new and better electronic devices, highlighting the limited U.S. production capacity for these critical components.
During a panel discussion on national security before the announcement Monday, Alan Shaffer, former deputy undersecretary of defense for acquisition and sustainment, said the supply chain fragility was brought to the fore when the pandemic arrived in the United States, and U.S. cargo planes had to fly special missions to Italy to pick up nasal swabs from the only manufacturer that could supply them.
Computer chips, of course, are vastly more sophisticated and harder to make than nasal swabs.
“Seventy-five percent of what we use in defense systems is sourced overseas … we have this enormous fragility,” Shaffer said.
The U.S. Senate last month passed the United States Innovation and Competition Act, which calls for a $250 billion investment in the semiconductor industry, including $52 billion to boost U.S. production by companies such as GlobalFoundries.
GlobalFoundries earlier this year said it would invest $1.4 billion in its semiconductor foundries in Germany, Singapore and the United States but did not provide details. It said last month it would invest an additional $6 billion in the three countries, the bulk of it in Singapore.
The $1 billion GlobalFoundries plans to spend on Fab 8 is independent of the public-private partnership it seeks to form to build Fab 8.2.
Since the start of construction in 2009, more than $15 billion has been invested in what is now called Fab 8. It is the workplace for nearly 3,000 people with average annual earnings of about $87,000. GlobalFoundries moved its headquarters there earlier this year.
The remainder of its U.S. workforce is about 2,200 employees near Burlington, Vermont, and about 1,300 in East Fishkill, at a facility that it has agree to sell.