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What you need to know for 04/24/2017

GlobalFoundries remains a true growth business

GlobalFoundries remains a true growth business

GlobalFoundries is continuing to expand, as it has almost continually since breaking ground for its
GlobalFoundries remains a true growth business
Construction on the Technology Development Center at GlobalFoundries is shown in this February photo.
Photographer: Marc Schultz

GlobalFoundries is continuing to expand, as it has almost continually since breaking ground for its chip fabrication plant in 2009.

The company at the center of the Capital Region’s developing technology sector goes into 2014 with a new research center under construction at its Fab 8 complex, a new CEO, and plans to spend billions of dollars more to re-tool the 3-year-old factory.

The semiconductor maker will also be hiring hundreds of additional manufacturing engineers and technicians, bringing total permanent manufacturing employment to around 3,000 by the end of this year.

Still in the offing, meanwhile, is the possibility the company will build a second manufacturing plant at its complex in the Luther Forest Technology Campus. The 223-acre site straddles the town line between Malta and Stillwater.

Building its future

But the main activity this winter has been construction of a $2.3 billion Technology Development Center for research and development and manufacturing — a project so big that other construction workers are expanding Fab 8’s gas yard and industrial utilities.

In all, this winter there are 3,500 construction workers reporting daily to Fab 8 — a village-worth of people that for now far exceeds the 2,100 permanent employees at Fab 8’s chip factory.

It’s so many construction workers that they’re being told to use a separate entrance from Cold Springs Road in Stillwater, to avoid traffic congestion at the plant’s main gate.

“The economic impact is enormous,” aid GlobalFoundries spokesman Travis Bullard. “Some are local, but some are coming in, renting apartments or rooms and eating in restaurants.”

GlobalFoundries spends an average of $1 million per day at Fab 8, he said — but that doesn’t include construction spending.

With exterior work still being done across the site, the severe cold in January slowed work more than anticipated, said Scott Kapracki, a GlobalFoundries program manager. The delays will be compensated for with longer hours or more workers later, he said — so the building should still be finished as scheduled by the end of 2014.

Fab 8’s factory has been in commercial production since 2012, but is still having the final manufacturing tools installed in an extension of its clean room, which is being increased to 300,000 square feet. At full production, the plant will be able to process 60,000 silicon wafers per month, each of which can be cut into as many as 1,000 computer chips.

The Technology Development Center will include 90,000 square feet of additional clean room, which will be available for research or as conventional manufacturing space when customer orders require it.

“The concept of the TDC is to give us flexibility, with traditional research and development and also production capacity,” Bullard said.

GlobalFoundries is a foundry company, the semiconductor industry term for a firm that manufactures chips to order for electronics companies that don’t want to enter the expensive business of making their own computer chips.

Formed in 2009 when AMD sold its manufacturing operations, GlobalFoundries named a new CEO, Sanjay Jha, in January to succeed Ajit Manocha. Jha has already made a couple of visits to Fab 8.

The company, headquartered in Silicon Valley, also has manufacturing plants in Singapore and Dresden, Germany.

Jha previously served as CEO of Motorola Mobility and chief operating officer of Qualcomm Inc., both of which are buyers of computer chips.

“Sanjay is one of the most respected leaders in the technology industry, with a proven track record for dramatically increasing market share and delivering shareholder value. His industry background and experience as a foundry customer will position GlobalFoundries for even greater growth,” Bullard said.

One industry analyst said the company should benefit from Jha’s customer experience.

“Sanjay brings a customer perspective which brings a level of trust to the customers’ top managements that he really understands their concerns and needs,” said Dan Hutcheson, CEO of VSLI Research.

GlobalFoundries’ last two CEOs, Doug Grose and Manocha, both came primarily from operational backgrounds, Hutcheson noted.

VSLI says the semiconductor market has generally been trending upwards going into 2014.

Forecasting firm IHS Electronics & Media is predicting that the overall semiconductor industry will grow 5.8 percent in 2014, and the foundry segment will grow more than 9 percent.

“IHS anticipates that GlobalFoundries will exceed the growth rate of both the overall industry as well as that of the average foundry market,” said Len Jelinek, IHS chief analyst.

“GlobalFoundries’ revenue strength is a result of their ability to deliver leading-edge technology for key clients that are participating in the mobile market as well as the consumer gaming market,” he said.

GlobalFoundries officials say the potential upside remains enormous, as more sophisticated chips go into smartphones, tablets, sensors built into automobiles and many other computer-assisted devices.

Moving forward

Last year, the company aggressively sought and won zoning approvals from both towns to build Fab 8.2, which could be a bigger factory than Fab 8.1 and cost as much as $15 billion. However, the company has made no further commitments since winning the town approvals in August.

“We will continue to judge the customer demand profile, and at some point it may make sense,” Bullard said.

Before that, GlobalFoundries owners’ — the Advanced Technology Investment Co., a fund owned by the government of Abu Dhabi — will be investing $9 billion to $10 billion in re-tooling its existing factories.

Some of the money will be spent in Dresden, Bullard said, but most will be spent at Fab 8, starting late this year.

The factory was originally designed to manufacture chips with circuits at the 28/32-nanometer scale, but just in the five years since construction started, already-microscopic circuit sizes have gotten even smaller.

“Accelerated customer demand for 20 nm and 14 nm has driven a need for more capacity on these advanced nodes, which require more expensive manufacturing equipment,” Bullard said.

With circuit sizes perhaps close to being as tiny as they can be, Bullard said some of the research planned for the TDC will be on 3-D designs, different ways to interconnect circuits and new ways besides miniaturization to make computer chips more efficient.

To help with that research, the company expects to hire around 900 additional people this year, mostly for engineering and technician roles, which will bring total on-site employment to 3,000. Such jobs typically have salaries of $80,000 or better.

Current job listings — all of which are on the GlobalFoundries website — are mostly for a variety of engineers and technicians.

Bullard said the TDC will allow the company to work closely with customers in designing chips that meet their needs, and to then test those designs in a manufacturing setting.

“It will allow us to give our customers fast feedback,” he said.

With 150 customers, Bullard said GlobalFoundries is well prepared to adapt as the electronics market shifts in the future, with different sectors rising and falling.

“GlobalFoundries is well-positioned, as we have more than 150 different customers across the spectrum of industry products, so as some segments decline and others increase, we have the diversity in our customer base to hedge against some of the big up-and-down swings that are typical in this industry,” he said.

Reach Gazette reporter Stephen Williams at 885-6705 or

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