(Bloomberg) -- The Biden administration has finalized Chips Act incentives for GlobalFoundries Inc., awarding the chipmaker $1.5 billion in grants to support US factories as part of a broader semiconductor push.
The binding agreement matches the grant amount proposed in February and means that GlobalFoundries can start receiving federal funding as it hits negotiated milestones at projects in Vermont and New York.
Separately, the company secured $550 million from New York state — mostly in the form of tax credits — as well as additional funding from Vermont. Companies applying for the federal program are required to shore up support from state governments.
The money will support more than $13 billion of total investment in two factory expansions and one new plant. The projects are expected to create almost 1,000 production jobs and employ 9,000 construction workers.
New York Governor Kathy Hochul said the efforts will attract thousands of well-paid jobs to the state’s capital region, the area surrounding Albany. “In fact, one in four American-made chips will be manufactured within 350 miles of upstate New York,” she said. Micron Technology Inc. is almost making a significant investment there.
Earlier: TSMC and GlobalFoundries Finish Talks Over Chips Act Awards
Though the Biden administration has allocated the vast majority of $39 billion in direct funding from the 2022 Chips and Science Act, US officials are only now finalizing the outlays. They need to reach legally binding agreements with more than 20 companies.
The contracts help insulate the incentives from changes that could come under President-elect Donald Trump. They also provide certainty about the eventual disbursement of money after more than a year of negotiations.
So far, the administration has announced three such accords, including one for industry leader Taiwan Semiconductor Manufacturing Co. Companies such as Intel Corp., Samsung Electronics Co. and Micron are still working to wrap up their talks.
The final GlobalFoundries deal doesn’t include $1.6 billion in Chips Act loans that had been part of its preliminary agreement. The company said it ultimately didn’t need that part of the package. “We have good relationships with the banks and good access to credit,” it said in a statement. “We have sufficient capital and liquidity to fund our US expansion plans.”
Most of the Chips Act money will support factories dedicated to cutting-edge semiconductors. But several billion dollars are slated for makers of older-generation chips that are used in a wide array of consumer and military devices.
GlobalFoundries is one of the largest producers of those components, and it’s slowly emerging from a two-year slump that made the company one of the worst performers in the Philadelphia Stock Exchange Semiconductor Index.
“By investing in GF’s domestic manufacturing capabilities, we are helping to secure a stable domestic supply of chips that are found in everything from home electronics to advanced weapons systems,” US Secretary of Commerce Gina Raimondo said in a statement.
--With assistance from Ian King.
©2024 Bloomberg L.P.
