GlobalFoundries Inc plans to build a US$4 billion chipmaking plant in Singapore that is scheduled to start in 2023, choosing Asia for the site of its latest expansion, despite US President Joe Biden’s administration calls to bring home semiconductor manufacturing.
The US-based firm joins rivals from Taiwan Semiconductor Manufacturing Co (台積電) to Samsung Electronics Co that are expanding capacity to help address a persistent shortfall of chips for everything from vehicles to smartphones.
GlobalFoundries — which is prepping a US initial public offering that could value the chipmaker at US$30 billion — said it is focusing on Singapore, but would also devote US$1 billion apiece to building out its Dresden, Germany, and US sites.
The company is to fund the lion’s share of that US$6 billion global expansion with contributions from pre-payments for its capacity, as well as government partnerships, CEO Tom Caulfield told reporters during an online briefing yesterday
“We’ll be accelerating our global footprint,” Caulfield said. “We have certain products for customers where they give us one of the products, it’s called taping-out, we can build in factories continents away. That gives us ultimate supply chain flexibility and security.”
The decision by GlobalFoundries, controlled by Abu Dhabi sovereign fund Mubadala Investment Co, coincides with debate in the US and Europe about whether the high concentration of global chipmaking capacity in Asia carries national security implications.
Caulfield said he was expanding in Singapore first, because that is where the company’s capacity is stretched.
The Biden administration is proposing to spend US$52 billion to fund chip production and research at home, an effort to secure supply of the intricate components at the heart of most modern devices and many military systems.
Beijing has appointed a top deputy of Chinese President Xi Jinping’s (習近平) to oversee the creation of a world-class industry of its own.
About “70 percent of all foundry manufacturing takes place in Taiwan, a couple of hundred miles away from China, from one company,” Caulfield said. “It’s put a huge risk to the world economy.”
GlobalFoundries is a big investor in Singapore, alongside peers Micron Technology Inc and Infineon Technologies AG. It has previously committed to expanding production in the city state, as well as in Europe and the US. Chipmaking facilities typically start producing chips 18 months to two years after breaking ground. When completed, GlobalFoundries’s Singapore facility, which would be a few generations behind the cutting edge, should primarily serve smartphone and auto demand.
The chip shortage has already forced several automakers around the globe to idle plants and could cost them US$110 billion in lost sales. Longer term, governments worry about lack of access to the critical components.
Caulfield said he expects chip demand to outpace supply over the next five to eight years.
GlobalFoundries has sold out the capacity for the new Singapore fab and is now planning a second phase, he said.
Singapore itself has focused on expanding its talent pool in semiconductors, an industry it has long sought foreign investment in. The chip sector is viewed as critical to the island’s electronics firms, which account for about 7 percent of the economy.
In the first four months of this year, electronics output grew 21.7 percent from a year ago, as demand surged in the wake of the COVID-19 pandemic. Singapore now aims to grow its manufacturing sector by 50 percent over the next 10 years to maintain its competitiveness.
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