GlobalFoundries

GlobalFoundries Boosts Its Chip Production Capacity with a US$4 Billion Singapore Plant

GlobalFoundries Inc. intends to build a US$4 billion chipmaking factory in Singapore, with construction set to begin in 2023, despite US President Joe Biden's administration's pleas to bring semiconductor production back home.

The US-based company joins competitors ranging from Taiwan Semiconductor Manufacturing Co () to Samsung Electronics Co in increasing production to help address a persistent shortage of chips for everything from automobiles to cellphones.

GlobalFoundries, which is preparing a US initial public offering that may value the chipmaker at $30 billion, said it will focus on Singapore, but will also invest $1 billion in its Dresden, Germany, and US facilities.

The majority of the US$6 billion worldwide expansion will be funded by pre-payments for capacity as well as government collaborations, according to CEO Tom Caulfield during an online briefing yesterday.

"We're going to expand our global footprint," Caulfield stated. "We have certain products for customers where they give us one of the products, which is called taping-out, and we can build in factories on different continents." This provides us with maximum supply chain flexibility and security."

The decision by GlobalFoundries, which is controlled by Abu Dhabi sovereign fund Mubadala Investment Co, coincides with a discussion in the United States and Europe about whether Asia's large concentration of global chipmaking capacity has national security implications.

Caulfield stated that he will initially grow in Singapore because that is where the company's capacity is most stressed.

The Biden administration proposes spending US$52 billion to boost domestic chip manufacture and research to ensure a steady supply of the sophisticated components that power most contemporary electronics and many military systems.

Beijing has named a key aide to Chinese President Xi Jinping () to supervise the development of its world-class industry.

"70 per cent of all foundry manufacturing takes place in Taiwan, a couple of hundred miles away from China, from one company," Caulfield added. "It has put the global economy at risk."

GlobalFoundries, along with Micron Technology Inc and Infineon Technologies AG, is a major investor in Singapore. It has previously stated that it intends to grow manufacturing in the city-state, as well as in Europe and the United States. Chip manufacturing plants generally begin producing chips 18 months to two years after breaking ground. When built, GlobalFoundries' Singapore factory will largely fulfil smartphone and car demand, despite being a few generations behind the leading edge.

The semiconductor scarcity has already prompted numerous automakers to idle operations throughout the world, potentially costing them US$110 billion in missed sales. Governments are concerned about a lack of access to crucial components in the long run.

Caulfield predicts that chip demand will outstrip supply over the next five to eight years.

According to him, GlobalFoundries has sold out the capacity for the new Singapore fab and is currently preparing a second phase.

Singapore has concentrated on growing its skill pool in semiconductors, an area in which it has traditionally attracted international investment. The chip industry is seen as essential to the island's electronics businesses, which account for around 7% of the GDP.

Electronics output increased 21.7% year on year in the first four months of this year, as demand increased in the aftermath of the COVID-19 outbreak. Singapore currently intends to increase its manufacturing sector by 50% over the next ten years to preserve its competitiveness.