In a new billion-dollar buzz across the semiconductor industry, the US Department of Commerce has recently announced a whopping $1.5 billion funding to GlobalFoundries.
Under its lucrative CHIPS Act, the fund will be a potential direct funding to GlobalFoundries.
Hot on the heels, New York to add another $600 million in funding to GlobalFoundries. This funding shall be done separately.
The funding is intended towards the company’s investments in Malta and New York and also ramp up its production capacity over the next decade.
GlobalFoundries also plans to foster its existing facility and also construction of a new fab on the same campus.
After this news broke across the globe, GlobalFoundries witnessed a jump in its shares.
Reacting to the news, Deutsche Bank, which has a Buy rating and $62 price target on the stock, said it believes the CHIPS Act/NY funding will help GFS more “profitability capitalize on both geopolitical trends toward localized, reliable capacity and semi sector-wide trends requiring more lagging edge capacity for markets such as Automotive, IoT, Defense, etc.”
“Overall, analysts have long expected GFS to be a primary beneficiary of the CHIPS Act (along with INTC and TXN – funding yet to be announced), and view the recent announcement favorably for the company and its share price,” they added.
“These proposed investments, along with the investment tax credit (ITC) for semiconductor manufacturing, are central to the next chapter of the GlobalFoundries story and our industry,” said Dr. Thomas Caulfield, president and CEO of GlobalFoundries. “They will also play an important role in making the U.S. semiconductor ecosystem more globally competitive and resilient and cements the New York Capital Region as a global semiconductor hub. With new onshore capacity and technology on the horizon, 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.”
There are three projects that GlobalFoundries is set to fund using the direct subsidies in the coming quarters.
Intel in queue for a Billion Dollar Funding?
The Biden administration is in discussions to provide more than $10 billion in CHIPS Act subsidies to Dow chip giant Intel, Bloomberg reported Friday evening, citing sources. The funding is expected to include outright grants as well as loans.
Taiwan Semiconductor Manufacturing (TSM) and Micron Technology (MU) are also likely to get some big grants from the current US Government. Taiwan Semiconductor, which makes chips for Apple (AAPL), Nvidia (NVDA) and many others, is building two plants in Arizona.
Inputs Taken From INVESTOR’S BUSINESS DAILY