MALTA -- GlobalFoundries is selling its former IBM chip plant in Dutchess County to another chipmaker, in a move that could bring new production to its Saratoga County plant, the two companies and state officials announced on Monday.
The 300-mm wafer plant in East Fishkill, which GlobalFoundries acquired from IBM in 2015, is being sold to ON Semiconductor for $430 million, with $100 million paid now, and $330 million by the end of 2022, when the sale will be completed.
As the sale is phased in, some chip production now done in East Fishkill is expected to shift to Fab 8, GlobalFoundries' flagship production facility in Malta, where 3,000 people work. There's no indication that will mean more jobs in Malta, though.
State officials said ON Semiconductor, a Fortune 500 company headquartered in Phoenix, Arizona, will invest $720 million in upgrading the plant over the next decade, and will do some additional hiring above the 950 now working at the plant.
"ON Semiconductor's decision to expand and grow its operations in New York state is proof positive that smart investments in our innovation economy are working and fueling New York's unprecedented growth," Gov. Andrew Cuomo said in a news release.
Empire State Development will be providing $40 million to support the deal, including $17.5 million in grants and $22.5 million in Excelsior program job creation tax credits.
Under the agreement, GlobalFoundries will start making chips at the plant for ON in 2020, and the plant will transition to ON's full control by the end of 2022. The deal includes a technology transfer and development agreement and a license of technology agreement.
"ON Seminconductor is an ideal partner for GlobalFoundries and this agreement is a transformative step in our journey to build GlobalFoundries into the world's leading specialty foundry," said Tom Caulfield, GlobalFoundries' CEO.
Caulfield, a former general manager of Fab 8, called the sale "a win for GlobalFoundries because it frees up resources to allow us to further invest in our Fab 8 Malta, NY facility while preserving our talented workforce in East Fishkill."
GlobalFoundries spokeswoman Erica McGill said the proceeds from the sale will be invested back into the company, including at Fab 8. "The transition not only gives GF the capital to invest in our differentiated technologies, but it also strengthens our technology leadership at our Fab 8 Malta facility, which the numerous technologies that will be redeployed from Fab 10 to Fab 8 over the next 3.5 years," she said in an email.
A county economic development official said he expects local benefits. “This is the right deal at the right time for the right reasons, and it promises significant long-term economic impact in Saratoga County and beyond," said Marty Vanags, president of the Saratoga County Prosperity Partnership.
The East Fishkill plant was one of two GlobalFoundries acquired from IBM in 2015 in a deal under which IBM paid GlobalFoundries $1.5 billion to take them. The other plant is in Essex Junction, Vermont.
ON Semiconductor makes chips for the automotive, communications, computing, consumer, industrial, medical, aerospace and defense applications, according to its website.