WASHINGTON, Feb 19 (Reuters) – The U.S. government is
awarding $1.5 billion to GlobalFoundries to subsidize
semiconductor production, the first major award from a $39
billion fund approved by Congress in 2022 to bolster domestic
chip production.

GlobalFoundries, the world’s third-largest contract
chipmaker, will build a new semiconductor production facility in
Malta, New York, and expand existing operations there and in
Burlington, Vermont, according to a preliminary agreement with
the Commerce Department.

The department in January announced

a $162 million planned award to Microchip Technology

and $35 million to

a BAE Systems facility

in New Hampshire in December.

The $1.5 billion GlobalFoundries grant will be accompanied
by $1.6 billion in available loans, with the funding expected to
generate $12.5 billion in overall potential investment across
the two states, the department said.

“The chips that GlobalFoundries will make in these new
facilities are essential chips to our national security,”
Commerce Secretary Gina Raimondo told reporters Sunday.

Raimondo told Reuters this month the agency is in active
talks with numerous applicants and expects to make several
announcements by the end of March.

“We’re in the process of really complicated, challenging
negotiations with these companies,” Raimondo told Reuters.
“These are highly complex, first-of-their-kind facilities. The
kind of facilities that TSMC, Samsung,
Intel, are proposing to do in the United States —
these are new-generation investments — size, scale complexity
that’s never been done before in this country.”

The GlobalFoundries chips are used in satellite and space
communications and the defense industry along with blind spot
detection and collision warnings in vehicles, along with Wi-Fi
and cellular connections.

“As an industry, we now need to turn our attention to
increasing the demand for U.S.-made chips, and to growing our
talented U.S. semiconductor workforce,” GlobalFoundries CEO
Thomas Caulfield said in a statement.

GlobalFoundries opened a $4 billion semiconductor
fabrication plant in Singapore in September, as part of a major
global manufacturing expansion.

The Malta facility expansion will secure a stable supply of
chips for auto suppliers and manufacturers, including General
Motors, Raimondo added.

GlobalFoundries and GM on Feb. 9 announced a long-term deal
for the automaker to secure U.S.-made processors that will help
it avoid factory-halting chip shortages like ones during the
COVID-19 pandemic.

“GlobalFoundries’ investment in New York both ensures a
robust supply of semiconductors in the U.S. to help GM meet
demand and supports U.S. leadership in automotive innovation,”
said General Motors President Mark Reuss.

The new facility in Malta will produce high-value chips that
are not currently made anywhere in the United States, Raimondo
added.
(Reporting by Doina Chiacu and David Shepardson; Editing by
Scott Malone, Chris Reese, Varun H K, Aurora Ellis and Nick
Zieminski)