GlobalFoundries receives $1.5 billion from the U.S. for semiconductor manufacturing.

The U.S. government is granting $1.5 billion to subsidize semiconductor production, marking the first significant award from a $39 billion fund approved by Congress in 2022 to strengthen domestic chip production.

The world's third-largest contract chipmaker, GlobalFoundries, has reached a preliminary agreement with the Commerce Department to construct a new semiconductor production facility in Malta, New York, and expand its existing operations in Burlington, Vermont.

In January, Microchip Technology received a planned award of $162 million from the department, while BAE Systems in New Hampshire received $35 million in December.

The $1.5 billion grant from GlobalFoundries will be complemented by $1.6 billion in loans, resulting in a potential investment of $12.5 billion across the two states, according to the department.

GlobalFoundries' new facilities will produce vital chips for national security, Commerce Secretary Gina Raimondo stated on Sunday.

Raimondo stated to Reuters this month that the agency is currently engaged in discussions with multiple candidates and anticipates making several announcements before the end of March.

Raimondo stated to Reuters that negotiations with these companies are highly complicated and challenging. These facilities are first-of-their-kind and represent new-generation investments with a size, scale, and complexity that has never been seen before in the United States.

GlobalFoundries chips are utilized in various industries, including satellite and space communications, defense, blind spot detection, collision warnings in vehicles, Wi-Fi, and cellular connections.

GlobalFoundries CEO Thomas Caulfield stated that as an industry, we must focus on boosting the demand for U.S.-made chips and expanding our skilled U.S. semiconductor workforce.

In September, GlobalFoundries launched a $4 billion semiconductor manufacturing plant in Singapore as part of its worldwide production expansion.

The Malta facility expansion will ensure a steady supply of chips for automotive suppliers and manufacturers, including Raimondo.

On Feb. 9, GlobalFoundries and GM reached a long-term agreement to obtain U.S.-made processors, which will assist the automaker in avoiding factory-halting chip shortages like those experienced during the Covid-19 pandemic.

GlobalFoundries' investment in New York supports both the supply of semiconductors in the U.S. and U.S. leadership in automotive innovation, as stated by General Motors President Mark Reuss.

Raimondo stated that the new facility in Malta will produce high-value chips that are not currently produced in the United States.