GlobalFoundries to take up-front payments for capacity

Business news |
By Nick Flaherty

US-headquartered GlobalFoundries will spend $1.4bn in 2021 to expand its manufacturing capacity, including the up-front payments, and could accelerate its IPO say reports. 

The capital expenditure will cover its three locations of the US, Singapore and Dresden in Germany and would be spread evenly between fabs to ramp production at nodes from 12nm to 90nm. About a third of the investment would come from customer payments to guarantee supply. Globalfoundries’ manufacturing capacity is expected to increase by 20 percent in 2022 after an increase of 13 percent in 2021, CEO Tom Caulfield told Reuters.

Caulfield said that he could bring forward capex because chip industry growth had been accelerated by the pandemic and was now expected to sustain compound annual growth rate of 10 percent over the next five years.

This supports comments earlier this week from Manfred Horstmann, head of Globalfoundries in Dresden, who is planning to increase output to one million wafer starts per year. This is over twice the current capacity: Plans to boost production 

However, a major decision on building an additional wafer fab in Malta, New York, still hangs on US government support.

Globalfoundries is owned by Mubadala, a sovereign wealth fund of the Abu Dhabi, and the IPO could now happen late in 2021 rather than the previous plan of record which was for the IPO to take place in 2022: Ready for US government co-investment

Globalfoundries backed away from pursuing leading-edge chip manufacturing at 7nm and finer geometries a few years ago and is now focused on a rich set of manufacturing capabilities just behind the leading edge. It is aiming for 9 or 10 percent growth from revenue of $5.7 billion in 2020, Caulfield said.

Globalfoundries is responding to a shortfall in demand exacerbated by the Covid-19 pandemic and which has hurt automotive supply lines. That shortfall looks set to also impact other application sectors (see Volkswagen may claim damages over chip shortages). It has also given rise to questions about strategic self-sufficency in semiconductors in various regions.

A decision to break ground on an additional wafer fab in Malta, New York would depend on US government funding measures to support domestic chip manufacturing, Caulfield added. In Europe there are also moves afoot to boost domestic chip making but as yet no declared plan.

Related articles

Other articles on eeNews Europe 


Linked Articles
eeNews Europe